Document:

Form of Certificate of Designations

 Exhibit 4.8 
  

CERTIFICATE OF DESIGNATIONS 
 OF THE

         % SERIES     [CONVERTIBLE] PREFERRED STOCK 
 (Par Value $.01 Per Share) 
  
 OF 
  
 THE PMI GROUP, INC. 
  

  
 Pursuant to Section 151 of the General Corporation Law of the State of
Delaware 
  

  
 The undersigned duly authorized officer of The PMI Group, Inc., a corporation organized and existing under the General Corporation Law of the State of
Delaware (the “Company”), in accordance with the provisions of Section 103 thereof, and pursuant to Section 151 thereof, DOES HEREBY CERTIFY: 
  
 That the Certificate of Incorporation of the Company provides that the Company is authorized to issue
             shares of Preferred Stock, par value $0.01 per share, issuable in series by the Board of Directors (the “Board”) of the Company. The Company has authorized and
reserved for issuance                  shares of Series A Junior Participating Preferred Stock (“Series A Preferred Stock”); and 
  
 That pursuant to the authority conferred upon the Board by the Certificate of
Incorporation of the Company, the Board on                          ,
200            , approved the creation, issuance and the voting powers of shares of Preferred Stock to be issued in one or more series as determined by a duly authorized committee of the
Board, and, on             , 200             such duly authorized committee of the Board adopted the following resolution
creating a series of              shares of Preferred Stock designated as set forth below: 
  
 RESOLVED, that pursuant to the authority expressly granted to and vested in the Board by provisions of the Certificate of Incorporation of the Company[,
as amended] (the “Certificate of Incorporation”) and the General Corporation Law of the State of Delaware, the issuance of a series of Preferred Stock, which shall consist of
             shares of the              shares of Preferred Stock which the Company now has authority to issue, be, and the same
hereby is, authorized, and this committee of the Board hereby fixes the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the shares of
such series (in addition to the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of 

 Incorporation which may be applicable to the Preferred Stock) authorized by this resolution as follows: 
  
 1. Designation and Rank. The designation of such series of Preferred
Stock authorized by this resolution shall be     % Series      [Convertible] Preferred Stock (the “Series     Preferred Stock”). The maximum number of shares of Series
    Preferred Stock shall be         . Shares of the Series      Preferred Stock shall have a liquidation preference of
$             per share. The Series     Preferred Stock shall rank prior to the Company’s Common Stock and to all other classes and series of equity securities of
the Company now or hereafter authorized, issued or outstanding (the Common Stock and such other classes and series of equity securities collectively may be referred to herein as the “Junior Stock”), other than any classes or series of
equity securities of the Company ranking on a parity with (the “Parity Stock”) or senior to (the “Senior Stock”) the Series      Preferred Stock as to dividend rights and rights upon liquidation, winding up or
dissolution of the Company. The Series      Preferred Stock shall be junior to all outstanding debt of the Company. [The Series      Preferred Stock shall be [senior to] [on a parity with] the Series
     Preferred Stock as to both payments of dividends and distribution of assets upon liquidation, dissolution and winding up of the Company.] The Series             
Preferred Stock shall be subject to creation of Senior Stock, Parity Stock and Junior Stock to the extent not expressly prohibited by the Company’s Certificate of Incorporation. 
  
 2. Cumulative Dividends; Priority. 
  
 (a) Payment of Dividends. The holders of record of shares of Series
             Preferred Stock shall be entitled to receive, when, as, and if declared by the Board, out of funds legally available therefor, cumulative cash dividends at the rate of
            % per annum per share, which shall accrue from the original issue date and be payable quarterly in arrears on the first day of [March, June, September and December] in each
year, commencing on             ,             , or, if such day is a non-business day, on the next business day (each of such
dates, a “Dividend Payment Date”). Each declared dividend shall be payable to holders of record as they appear on the stock books of the Company at the close of business on such record dates, not more than 60 calendar days preceding the
payment dates therefor, as are determined by the Board or a duly authorized committee thereof (each of such dates, a “Record Date”). Quarterly dividend periods (each a “Dividend Period”) shall commence on and include the first
day of [March, June, September and December] of each year and shall end on and include the date next preceding the next following Dividend Payment Date. 
  
 The amount of dividends payable per share for each full Dividend Period shall be computed by dividing by four the amount determined by
applying the             % annual dividend rate to the $             liquidation preference of such share. Dividends on the
Series              Preferred Stock shall accrue day by day. Dividends shall be cumulative. The initial quarterly dividend payable on
            ,              and the amount of any dividend payable for any other 
  

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 period shorter than a full Dividend Period shall be computed on the basis of a 360-day year composed of
twelve 30-day months and the actual number of days elapsed in such period. 
  
 (b) Priority as to Dividends. No full dividends shall be declared or paid or set apart for payment on Preferred Stock of any series ranking, as to dividends, on a parity with or junior to the Series
             Preferred Stock for any period unless full dividends for the immediately preceding Dividend Period on the Series
             Preferred Stock (including any accumulation in respect of unpaid dividends from prior Dividend Periods) have been or contemporaneously are declared and paid (or declared and a
sum sufficient for the payment thereof set apart for such payment). When dividends are not paid in full (or declared and a sum sufficient for such full payment is not so set apart) upon the Series
             Preferred Stock and any other Preferred Stock ranking on a parity as to dividends with the Series             
Preferred Stock, dividends declared upon shares of Series              Preferred Stock and such other Preferred Stock ranking on a parity as to dividends shall be declared pro rata, so that
the amount of dividends declared per share on the Series              Preferred Stock and such other Preferred Stock shall bear in all cases to each other the same ratio that accrued
dividends for the then-current Dividend Period per share on the shares of Series              Preferred Stock (including any accumulation in respect of unpaid dividends for prior Dividend
Periods) and accrued dividends, including required or permitted accumulations, if any, of such other Preferred Stock, bear to each other. 
  
 Unless full dividends on the Series              Preferred Stock have been
declared and paid or set apart for payment for the immediately preceding Dividend Period (including any accumulation in respect of unpaid dividends for prior Dividend Periods) (i) no cash dividend or other distribution (other than in shares of
Junior Stock) shall be declared or paid or set aside for payment on the Junior Stock, (ii) the Company may not, directly or indirectly, repurchase, redeem or otherwise acquire any shares of its Junior Stock (or any moneys paid to or made available
for a sinking fund for the redemption of any shares except by conversion into or exchange for Junior Stock) and (iii) the Company may not, directly or indirectly, repurchase, redeem or otherwise acquire any shares of Series
             Preferred Stock or Parity Stock (or any moneys paid to or made available for a sinking fund for the redemption of any shares of any such stock) otherwise than pursuant to a pro
rata offer to purchase or a concurrent redemption of all, or a pro rata portion, of the outstanding shares of Series              Preferred Stock and Parity Stock (except by conversion into
or exchange for Junior Stock). 
  
 The Company
shall not permit any subsidiary of the Company to purchase or otherwise acquire for consideration any shares of stock of the Company if, under the preceding paragraph, the Company would be prohibited from purchasing or otherwise acquiring such
shares at such time and in such manner. 
  

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 3. Redemption. 
  
 (a) General. The shares of the Series
             Preferred Stock will not be redeemable prior to             ,
20            . At any time on or after             , 20            ,
subject to the applicable restrictions set forth in this Section 3 and applicable law, the shares of Series              Preferred Stock may be redeemed, in whole or in part, at the
election of the Company, upon notice as provided in Section 3(b) hereof, by resolution of its Board of Directors, at any time or from time to time, at the redemption price of $            
per share, plus, in each case, an amount equal to all accrued and unpaid dividends to the date fixed for redemption. 
  
 If less than all the outstanding shares of Series              Preferred Stock
are to be redeemed, the Company will select those to be redeemed pro rata, by lot or by a substantially equivalent method. On and after the redemption date, dividends shall cease to accrue on the shares of Series
             Preferred Stock called for redemption, and they shall be deemed to cease to be outstanding, provided that the redemption price (including any accrued and unpaid dividends to
the date fixed for redemption) has been duly paid or provided for. 
  
 (b) Notice of Redemption. Notice of any redemption, setting forth (i) the date and place fixed for said redemption, (ii) the redemption price and (iii) a statement that dividends on the shares of Series
             Preferred Stock to be redeemed will cease to accrue and accumulate on such redemption date shall be mailed, postage prepaid, at least 30 days but not more than 60 days prior to
said redemption date to each holder of record of the Series              Preferred Stock to be redeemed at his or her address as the same shall appear on the books of the Company. If less
than all the shares of the Series              Preferred Stock owned by such holder are then to be redeemed, the notice shall specify the number of shares thereof which are to be redeemed
and the numbers of the certificates representing such shares. 
  
 If such notice of redemption shall have been so mailed and if on or before the redemption date specified in such notice all funds necessary for such redemption shall have been set aside by the Company separate and
apart from its other funds in trust for the account of the holders of the shares of the Series              Preferred Stock so to be redeemed (so as to be and continue to be available
therefor), then, on and after said redemption date, notwithstanding that any certificate for shares of the Series              Preferred Stock so called for redemption shall not have been
surrendered for cancellation, the shares of the Series              Preferred Stock so called for redemption shall be deemed to be no longer outstanding, the dividends thereon shall cease
to accrue, and all rights with respect to such shares of the Series              Preferred Stock so called for redemption shall forthwith cease and terminate, except only the right of the
holders thereof to receive out of the funds so set aside in trust the amount payable on redemption 
  

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 thereof, but without interest, upon surrender (and endorsement or assignment for transfer, if required by
the Company) of their certificates. 
  
 However,
if such notice of redemption shall have been so mailed, and if prior to the date of redemption specified in such notice all said funds necessary for such redemption shall have been irrevocably deposited in trust for the account of the holders of the
shares of the Series              Preferred Stock to be redeemed (so as to be and continue to be available therefor) with a bank or trust company named in such notice doing business in the
City of New York and having capital surplus and undivided profits of at least $50,000,000, thereupon and without awaiting the redemption date, all shares of the Series             
Preferred Stock with respect to which such notice shall have been so mailed, and such deposit shall have been so made shall be deemed to be no longer outstanding and all rights with respect to such shares of the Series
             Preferred Stock shall forthwith upon such deposit in trust cease and terminate, except only the right of the holders thereof on or after the redemption date to receive from
such deposit the amount payable upon the redemption, but without interest, upon surrender (and endorsement or assignment to transfer, if required by the Company) of their certificates. 
  
 In case the holders of shares of the Series
             Preferred Stock which shall have been redeemed shall not within two years (or any longer period if required by law) after the redemption date claim any amount so deposited in
trust for the redemption of such shares, such bank or trust company shall, upon demand and if permitted by applicable law, pay over to the Company any such unclaimed amount so deposited with it, and shall thereupon be relieved of all responsibility
in respect thereof, and thereafter the holders of such shares shall, subject to applicable escheat laws, look only to the Company for payment of the redemption price thereof, but without interest from the date of redemption. 
  
 (c) Status of Shares Redeemed. Shares of Series
             Preferred Stock redeemed, purchased or otherwise acquired for value by the Company, shall, after such acquisition, have the status of authorized and unissued shares of
Preferred Stock and may be reissued by the Company at any time as shares of any series of Preferred Stock other than as shares of Series              Preferred Stock. 
  
 4. Voting Rights. 
  
 The voting rights of the Series
             Preferred Stock shall be as follows: 
  
 [(a) General Voting Rights. Except as expressly provided hereinafter in this Section, or as otherwise from time to time required by
applicable law, the Series              Preferred Stock shall have no voting rights. 
  

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 (b) Voting Rights Upon Dividend Arrears. 
  
 (i) Right to Elect Directors. In the event that an
amount equal to six quarterly dividend payments on the Series              Preferred Stock shall have accrued and be unpaid, the holders of the Series
             Preferred Stock shall have the right, voting separately as a class together with holders of shares of any Parity Stock upon which like voting rights have been conferred and are
exercisable (“Voting Parity Stock”), to elect [two] members of the Board of Directors, each member to be in addition to the then authorized number of directors, at the next annual meeting of stockholders and thereafter until dividends on
the Series              Preferred Stock have been paid in full for four consecutive Dividend Periods, including the last preceding Dividend Period. 
  
 (ii) Term of Office of Directors. Any director who
shall have been elected by holders of the Series              Preferred Stock and Voting Parity Stock entitled to vote in accordance with this subparagraph (b) shall hold office for a term
expiring (subject to the earlier payment, or declaration and setting aside for payment, of dividends on the Series              Preferred Stock for four consecutive Dividend Periods as
described below) at the next annual meeting of stockholders and during such term may be removed at any time, either for or without cause, by, and only by, the affirmative vote of the holders of record of a majority of the shares of the Series
             Preferred Stock and Voting Parity Stock present and voting, in person or by proxy, at a special meeting of such stockholders called for such purpose, and any vacancy created by
such removal may also be filled at such meeting. A meeting for the removal of a director elected by the holders of the Series              Preferred Stock and Voting Parity Stock and the
filling of the vacancy created thereby shall be called by the Secretary of the Company as promptly as possible and in any event within 10 days after receipt of a request therefor signed by the holders of not less than 25% of the outstanding shares
of the Series              Preferred Stock, subject to any applicable notice requirements imposed by law or regulation. Such meeting shall be held at the earliest practicable date
thereafter, provided that no such meeting shall be required to be held during the 90-day period preceding the date fixed for the annual meeting of stockholders. 
  
 Upon payment, or declaration and setting aside for payment, of dividends on the Series
             Preferred Stock for four consecutive Dividend Periods the terms of office of all directors elected by the holders of the shares of the Series
             Preferred Stock and the Voting Parity Stock pursuant thereto then in office shall, without further action, thereupon terminate unless otherwise required by law. Upon such
termination the number of directors constituting the Board of the Company shall, without further action, be reduced by two, subject always to the increase of the number of directors pursuant to the foregoing provisions in 
  

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 the case of the future right of holders of the shares of the Series
             Preferred Stock and Voting Parity Stock to elect directors as provided above. 
  
 (iii) Vacancies. Any vacancy caused by the death or resignation of a director who shall have been elected in accordance with this
subparagraph (b) may be filled by the remaining director so elected or, if not so filled, by a vote of holders of a plurality of the shares of the Series              Preferred Stock and
Voting Parity Stock present and voting, in person or by proxy, at a meeting called for such purpose. Unless such vacancy shall have been filled by the remaining director as aforesaid, such meeting shall be called by the Secretary of the Company at
the earliest practicable date after such death or resignation, and in any event within 10 days after receipt of a written request signed by the holders of record of at least 25% of the outstanding shares of the Series
             Preferred Stock, subject to any applicable notice requirements imposed by law or regulation. Notwithstanding the provisions of this paragraph, no such special meeting shall be
required to be held during the 90-day period preceding the date fixed for the annual meeting of stockholders. 
  
 (iv) Stockholders’ Right to Call Meeting. If any meeting of the holders of the Series
             Preferred Stock and Voting Parity Stock required by this subparagraph (b) to be called shall not have been called within 30 days after personal service of a written request
therefor upon the Secretary of the Company or within 30 days after mailing the same within the United States of America by registered mail addressed to the Secretary of the Company at its principal executive offices, subject to any applicable notice
requirements imposed by law or regulation, then the holders of record of at least 25% of the outstanding shares of the Series              Preferred Stock may designate in writing one of
their number to call such meeting at the expense of the Company, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders or such shorter notice (but in no event shorter than permitted
by law or regulation) as may be acceptable to the holders of a majority of the total number of shares of the Series              Preferred Stock. Any holder of the Series
             Preferred Stock so designated shall have access to the Preferred Stock books of the Company for the Series
             Preferred Stock for the purpose of causing such meeting to be called pursuant to these provisions. 
  
 (v) Quorum. At any meeting of the holders of the Series
             Preferred Stock called in accordance with the provisions of this subparagraph (b) for the election or removal of directors, the presence in person or by proxy of the holders of
a majority of the total number of shares of the Series              Preferred Stock and Voting Parity Stock shall be required to constitute a quorum; in the absence of a quorum, a majority
of 
  

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the holders present in person or by proxy shall have power to adjourn the meeting from time to time without notice other than an announcement at the meeting,
until a quorum shall be present. 
  
 (c)
Voting Rights on Extraordinary Matters. So long as any shares of the Series              Preferred Stock shall be outstanding and unless the consent or approval of a greater number
of shares shall then be required by law, without first obtaining the approval of the holders of at least two-thirds of the number of shares of the Series              Preferred Stock at the
time outstanding (voting separately as a class together with the holders of shares (on a one vote per share basis) of Voting Parity Stock) given in person or by proxy at a meeting at which the holders of such shares shall be entitled to vote
separately as a class, the Company shall not either directly or indirectly or through merger or consolidation with any other company, (i) authorize, create or issue, or increase the authorized or issued amount, of any class or series of stock
ranking prior to the shares of the Series              Preferred Stock in rights and preferences or (ii) approve any amendment to (or otherwise alter or repeal) its Certificate of
Incorporation (or this resolution) which would materially and adversely change the specific terms of the Series              Preferred Stock. 
  
 An amendment which increases the number of authorized shares
of any class or series of Preferred Stock or authorizes the creation or issuance of other classes or series of Preferred Stock, in each case ranking junior to or on a parity with the Series
             Preferred Stock with respect to the payment of dividends and distribution of assets upon liquidation, dissolution or winding up, or substitutes the surviving entity in a merger
or consolidation, reorganization or other business combination for the Company, shall not be considered to be such an adverse change. 
  
 (d) One Vote Per Share. In connection with any matter on which holders of the Series
             Preferred Stock are entitled to vote as provided in paragraphs (b) and (c) of this Section, or any matter on which the holders of the Series
             Preferred Stock are entitled to vote as one class or otherwise pursuant to law or the provisions of the Certificate of Incorporation, each holder of the Series
             Preferred Stock shall be entitled to one vote for each share of the Series              Preferred Stock held by such
holder.] 
  
 [In connection with any matter on
which holders of the Company’s Common Stock are entitled to vote, each holder of the Series              Preferred Stock shall be entitled to [one vote, voting together with such
Common Stock as a single class, for each share of the Series              Preferred Stock held by such holder].] 
  
 5. No Sinking Fund. [No sinking fund will be established for the retirement or redemption of shares of Series
             Preferred Stock.] [Insert any applicable sinking fund provisions.] 
  

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 [6. Conversion. [Insert any applicable conversion provisions.]] 
  
 [6.] [7.] Liquidation Rights; Priority. 
  
 (a) In the event of any liquidation, dissolution or winding
up of the affairs of the Company, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Company, the holders of shares of the Series
             Preferred Stock shall be entitled to receive, out of the assets of the Company, whether such assets are capital or surplus and whether or not any dividends as such are
declared, $             per share plus an amount equal to all accrued and unpaid dividend for prior Dividend Periods, and no more, before any distribution shall be made to the holders of
the Common Stock or any other class of stock or series thereof ranking junior to the Series              Preferred Stock with respect to the distribution of assets. After payment of the
full amount of the liquidation preference, the holders of shares of the Series              Preferred Stock shall not be entitled to any further participation. 
  
 (b) Nothing contained in this Section [6] [7] shall be
deemed to prevent redemption of shares of the Series              Preferred Stock by the Company in the manner provided in Section 3. Neither the merger nor consolidation of the Company
into or with any other company, nor the merger or consolidation of any other company into or with the Company, nor a sale, transfer or lease of all or any part of the assets of the Company, shall be deemed to be a liquidation, dissolution or winding
up of the Company within the meaning of this Section [6] [7]. 
  
 (c) Written notice of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, stating a payment date and the place where the distributable amounts shall be payable, shall be
given by mail, postage prepaid, no less than 30 days prior to the payment date stated therein, to the holders of record of the Series              Preferred Stock at their respective
addresses as the same shall appear on the books of the Company. 
  
 (d) If the amounts available for distribution with respect to the Series              Preferred Stock and all other outstanding stock of the Company ranking
on a parity with the Series              Preferred Stock upon liquidation are not sufficient to satisfy the full liquidation rights of all the outstanding Series
             Preferred Stock and stock ranking on a parity therewith, then the holders of each series of such stock will share ratably in any such distribution of assets in proportion to
the full respective preferential amount (which in the case of Preferred Stock may include accumulated dividends) to which they are entitled. 
  

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 IN WITNESS WHEREOF, The PMI Group, Inc. has caused this Certificate to be signed by
            , its [President], and attested by             , its [Secretary], this
             day of             , 20            . 
  

	THE PMI GROUP, INC.
		
	 By:
	 	

	 	 	[Name and Title]

 Attest: 
  
 [Name and Title] 
  

 10Exhibit 10.1

                              EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
the 1st day of August, 2003, by and between MFA MORTGAGE INVESTMENTS, INC., a
Maryland corporation ("MFA"), and TIMOTHY W. KORTH II, an individual residing at
544 Lawrence Avenue, Westfield, New Jersey 07090 (the "Executive").

                              W I T N E S S E T H :

            WHEREAS, MFA wishes to offer employment to, and secure the exclusive
services of, the Executive, and the Executive wishes to accept such offer, under
the terms and conditions described below.

            NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree 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 shall commence as of August
1, 2003 and shall continue until July 31, 2005. 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 General Counsel, Senior Vice President - Business Development and Secretary
of MFA, reporting to the President and Chief Executive Officer of MFA (the
"CEO") and, as such, shall (i) perform, administer, manage, monitor and/or
coordinate all legal services required to be performed by or on behalf of MFA
and its subsidiaries, (ii) be responsible for analyzing, developing and
implementing new business initiatives for MFA and its subsidiaries and (iii)
perform such other duties of an executive, managerial or administrative nature
as shall be specified and designated from time to time by the CEO and/or the
Board of Directors of MFA (the "Board of Directors").

            (b) During the Term of Employment, the Executive shall, without
additional compensation, also serve on the board of directors of, serve as an
officer of, and/or perform such executive and consulting services for, or on
behalf of, such subsidiaries or affiliates of MFA as the CEO and/or 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").

<PAGE>

            (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, MFA shall pay to the
Executive a base salary (the "Base Salary") equal to $225,000 per annum. The
Base Salary shall be paid in accordance with MFA's normal payroll practices.

            (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 recommended by the CEO and approved by the Compensation Committee of
the Board of Directors or the Board of Directors, as the case may be; provided,
however, that, with respect to the first year of the Initial Term, the Executive
shall be guaranteed an annual performance bonus of not less than $75,000.

            (c) Long-Term Incentive Program. The Executive shall be eligible to
receive such stock option, restricted stock or dividend equivalent rights
("DERs") grants as the Compensation Committee of the Board of Directors or the
Board of Directors, as the case may be, shall deem appropriate. Notwithstanding
the foregoing, on February 2, 2004, the Executive shall be granted 50,000 stock
options, together with an equivalent number of DERs, which shall have a term of
10 years. Such DERs shall, in accordance with the terms of MFA's Second Amended
and Restated 1997 Stock Option Plan, expire upon the exercise, forfeiture or
lapse without exercise of the related stock options. Such stock options shall
have an exercise price equal to the last closing sales price of MFA's common
stock on February 2, 2004. Twenty-five percent of the stock options and DERs so
granted shall immediately vest, with such vested stock options being immediately
exercisable, and each year thereafter, for the next three years, 25% of the
total amount of stock options and DERs so granted shall cumulatively become
vested, and such vested options shall be exercisable, upon the anniversary of
the date of grant.

            (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
four 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.

                                       2
<PAGE>

      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 for (A) a period of
six months following the date of such termination, if such termination occurs
prior to the first anniversary of this Agreement, and (B) a period of one year
following the date of such termination, if such termination occurs on or after
the first anniversary of this Agreement, 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, the 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.

            (b) Termination Without Cause or for Good Reason. In the event the
Executive's employment is terminated by MFA without Cause (which shall not
include any non-renewal of this Agreement by MFA 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 six-month 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,

                                       3
<PAGE>

            (i)   MFA shall pay to Executive in a lump sum, within 30 days
                  following the termination of employment, an amount equal to
                  100% of the sum of (a) the Executive's then current Base
                  Salary and (b) the Executive's bonus for the immediately
                  preceding year (which during the first year of the Initial
                  Term shall be deemed to be $75,000);

            (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 and his immediate family 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);

            (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.

                                       4
<PAGE>

      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 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 this Agreement, be considered an
                  Incumbent Director; or

                                       5
<PAGE>

            (iii) there shall occur (A) any consolidation or merger of MFA or
                  any subsidiary where the stockholders of MFA, immediately
                  prior to the consolidation or merger, would not, immediately
                  after the consolidation or merger, beneficially own (as such
                  term is defined in Rule 13d-3 under the Act), directly or
                  indirectly, shares representing in the aggregate 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 30 business days any payment
                  due from MFA;

                                       6
<PAGE>

            (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.

      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.

      8. 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.

      9. Assignability; Binding Nature.

            This Agreement shall inure to the benefit of MFA and the Executive
and their respective successors, heirs (in the case of the Executive) and
assigns. No rights or obligations of MFA under this Agreement may be assigned or
transferred by MFA except that any such rights or obligations may be assigned or
transferred pursuant to a merger or consolidation in which MFA is not the
continuing entity, or the sale or liquidation of all or substantially all of the
assets of MFA, provided that the assignee or transferee is the successor to all
or substantially all of the assets of MFA and such assignee or transferee
assumes the liabilities, obligations and duties of MFA, as contained in this
Agreement, either contractually or as a matter of law. This Agreement shall not
be assignable by the Executive.

      10. Representation.

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

                                       7
<PAGE>

      11. Entire Agreement.

            This Agreement contains the entire agreement between MFA and the
Executive concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between them with respect thereto.

      12. Amendment or Waiver.

            This Agreement cannot be changed, modified or amended without the
consent in writing of both the Executive and MFA. No waiver by either MFA or the
Executive at any time of any breach by the other party of any condition or
provision of this Agreement shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or at any prior or subsequent time. Any
waiver must be in writing and signed by the Executive or an authorized officer
of MFA, as the case may be.

      13. Severability.

            In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, in whole or in
part, the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted by law.

      14. Reasonableness.

            To the extent that any provision or portion of this Agreement is
determined to be unenforceable by a court of law or equity, that provision or
portion of this Agreement shall nevertheless be enforceable to the extent that
such court determines is reasonable.

      15. Survivorship.

            The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.

      16. Governing Law.

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

      17. 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.

                                       8
<PAGE>

      18. 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.

      19. Counterparts.

            This Agreement may be executed in two or more counterparts.

                                       9
<PAGE>

            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: President

                                                      /s/Timothy W. Korth II
                                                      --------------------------
                                                         Timothy W. Korth II

                                       10

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