MFA MORTGAGE INVESTMENTS
EMPLOYMENT AGREEMENT OF RONALD A. FREYDBERG
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>2
<FILENAME>e400426_ex10-3.htm
<DESCRIPTION>EMPLOYMENT AGREEMENT OF RONALD A. FREYDBERG
<TEXT>
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<P ALIGN="right"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Exhibit
  10.3</B></FONT></FONT></P>
<P ALIGN="CENTER"><b><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">AMENDED
  AND RESTATED<br>
  EMPLOYMENT AGREEMENT</FONT></FONT></b></P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">THIS
  AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this &#147;Agreement&#148;) is entered
  into as of the 30th day of March, 2004, by and between MFA MORTGAGE INVESTMENTS,
  INC., a Maryland corporation (&#147;MFA&#148;), and RONALD A. FREYDBERG, an
  individual residing at 3 Red Roof Drive, Rye Brook, New York 10573 (the &#147;Executive&#148;).</FONT></FONT>
</P>
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">W
  I T N E S S E T H :</FONT></FONT></P>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">WHEREAS,
  MFA and the Executive entered into an employment agreement, effective as of
  August 1, 2002 (the &#147;Employment Agreement&#148;);</FONT></FONT> </P>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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</FONT></FONT> </P>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT> </P>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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:</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">1.
  <u>Term of Employment.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(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&nbsp;2 below for the Term of Employment, subject to the terms and
  conditions of this Agreement.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(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 &#147;Renewal Term&#148;) 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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2.
  <u>Position; Duties and Responsibilities.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(a)
  During the Term of Employment, the Executive shall be employed as Executive
  Vice President of MFA, reporting to the President and Chief Executive Officer
  of MFA (the &#147;CEO&#148;), 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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(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 &#147;Board
  of Directors&#148;) may, from time to time, request. MFA and such subsidiaries
  and affiliates are hereinafter referred to, collectively, as the &#147;Company.&#148;
  For purposes of this Agreement, the term &#147;affiliate&#148; shall have the
  meaning ascribed thereto in Rule 12b-2 under the Securities Exchange Act of
  1934, as amended (the &#147;Act&#148;).</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(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.</FONT></FONT> </P>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">1</font></p>
<hr width="100%" size="2">
<P align="left" style="page-break-before:always">&nbsp;</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3.
  <u>Compensation.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(a)
  <u>Base Salary.</u> During the Term of Employment, the Executive shall be entitled
  to receive an annualized base salary (the &quot;Base Salary&#148;) equal to
  the product of .20% times MFA&#146;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 &#147;Calculation Period&#148;) and
  shall be paid during the subsequent six-month period commencing August 1 and
  February 1, respectively (each, a &#147;Payment Period&#148;), in accordance
  with MFA&#146;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&#146;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&#146;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&#146;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 <U>Schedule
  I</U> hereto.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(b)
  <u>Performance Bonus.</u> 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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(c)
  <u>Long-Term Incentive Program.</u> 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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(d)
  <u>Annual Review.</u> 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&#146;s entire compensation package to determine whether it continues
  to meet MFA&#146;s compensation objectives.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">4.
  <u>Employee Benefit Programs and Fringe Benefits.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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&#146;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&#146;s policies, incurred by Executive in connection with his employment.</FONT></FONT>
</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">5.
  <u>Termination of Employment.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(a)
  <u>Termination Due to Death or Disability.</u> If the Executive's employment
  is terminated during the Term of Employment by reason of the Executive&#146;s
  death or Disability, the Executive&#146;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&#146;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&#146;s
  health insurance coverage shall be continued at MFA&#146;s expense for the duration
  of such Disability; provided, that, if such coverage cannot be provided under
  MFA&#146;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&#146;s attainment of age 65 or such later date through which coverage
  is permissible under MFA&#146;s health insurance policy.</FONT></FONT> </P>

<p align="center"><font size="2" face="Times New Roman, Times, serif">2</font></p>
<hr width="100%" size="2">
<P align="left" style="page-break-before:always">&nbsp;</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(b)
  <u>Termination Without Cause or for Good Reason.</u> In the event the Executive's
  employment is terminated by MFA without Cause including by notice of MFA&#146;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&#146;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&#146;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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(c)
  <u>Termination by MFA for Cause or Voluntary Termination by the Executive.</u>
  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.</FONT></FONT>
</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(d)
  <u>Termination Related to Change in Control.</u> 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&#146;s employment
  by MFA other than for Cause or the Employee&#146;s resignation of his employment
  for Good Reason within twelve months following a Change in Control,</FONT></FONT>
</P>
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(i) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> 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;</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(ii) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> 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</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(iii) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> 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.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(e)
  <u>Other Payments.</u> 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:</FONT></FONT> </P>
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(i) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> any
annual bonus earned during one or more preceding years but not paid;</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(ii) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> any
vested deferred compensation (including any interest accrued on such deferred amounts);</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(iii) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> reimbursement
for reasonable business expenses incurred but not yet reimbursed by MFA; and</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(iv) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> 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.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(f)
  <u>No Mitigation; No Offset.</u> 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.</FONT></FONT> </P>

<p align="center"><font size="2" face="Times New Roman, Times, serif">3</font></p>
<hr width="100%" size="2">
<P align="left" style="page-break-before:always">&nbsp;</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">6.
  <u>Definitions.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">For
  purposes of this Agreement, the following terms shall be defined as set forth
  below:</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(a)
  <u>Cause.</u> &#147;Cause&#148; 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 &#147;Default&#148;), 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.</FONT></FONT>
</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(b)
  <u>Change in Control.</u> A &quot;Change in Control&quot; shall mean the occurrence
  of any one of the following events: </FONT></FONT></P>
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(i) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> any
&#147;person,&#148; 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  &#147;associates&#148; (as such term is
defined in Rule 12b-2 under the Act)  of such person,  shall become the &#147;beneficial
owner&#148; (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  (&#147;voting  securities&#148;) or (B)  the
then  outstanding  shares of common  stock of MFA  (&#147;Shares&#148;)  (in  either
such case  other  than as a result of an  acquisition of securities directly from MFA); or</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(ii) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> 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 &#147;Incumbent  Directors&#148;) 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</FONT></FONT> </P></TD>
</TR>
</TABLE>
<p align="center"><font size="2" face="Times New Roman, Times, serif">4</font></p>
<hr width="100%" size="2">
<P align="left" style="page-break-before:always">&nbsp;</P>



<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
  <TR VALIGN="TOP">
    <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(iii)
      </FONT></FONT></TD>
    <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">
        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.</FONT></FONT> </P></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD ALIGN="RIGHT">&nbsp;</TD>
    <TD ALIGN="LEFT">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR VALIGN="TOP">
    <TD ALIGN="RIGHT">&nbsp;</TD>
    <TD ALIGN="LEFT">&nbsp;</TD>
    <TD><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">Notwithstanding
      the foregoing, a &#147;Change in Control&#148; 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 &#147;Change in Control&#148;
      shall be deemed to have occurred for purposes of this Paragraph 6(b).</FONT></FONT>
    </TD>
  </TR>
</TABLE>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(c)
  <u>Disability.</u> &#147;Disability&#148; 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).</FONT></FONT>
</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(d)
  <u>Good Reason.</u> &#147;Good Reason&#148; shall mean:</FONT></FONT> </P>
<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(i) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> a
material diminution in the Executive's title, duties or responsibilities;</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(ii) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> relocation
of the Executive's place of employment without his consent outside the New York City
metropolitan area;</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(iii) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> the
failure of MFA to pay within thirty (30) business days any payment due from MFA;</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(iv) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> 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</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT" WIDTH="6%"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(v) </FONT></FONT></TD>
     <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
     <TD WIDTH="91%"><P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> the
failure by MFA to honor any of its material obligations herein.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(e)
  <u>Non Cash Items.</u> </FONT><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&#147;</FONT></FONT><FONT SIZE="2">Non
  Cash Items</FONT><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&#148;</FONT></FONT><FONT SIZE="2">
  shall mean depreciation, non cash merger expenses, gains/losses on asset sales,
  and impairment charges.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(f)
  <u>Return on Equity.</u> </FONT><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&#147;</FONT></FONT><FONT SIZE="2">Return
  on Equity</FONT><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&#148;</FONT></FONT><FONT SIZE="2">
  shall mean six months GAAP net income plus (minus) certain Non Cash Items divided
  by average Tangible Net Worth, annualized.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(g)
  <u>Tangible Net Worth. </u></FONT><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&#147;</FONT></FONT><FONT SIZE="2">Tangible
  Net Worth</FONT><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&#148;</FONT></FONT><FONT SIZE="2">
  shall mean stockholder equity less goodwill.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">7.
  <u>Covenant Not To Compete.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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</FONT></FONT></P>

<p align="center"><font size="2" face="Times New Roman, Times, serif">5</font></p>
<hr width="100%" size="2">
<P align="left" style="page-break-before:always">&nbsp;</P>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> required
  by law, the Executive shall keep confidential all materials, files, reports,
  correspondence, records and other documents (collectively the &#147;Company
  Materials&#148;) 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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">8.<u>
  Indemnification.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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&#146;s duties
  with the Company, against all costs, expenses, liabilities and losses (including,
  without limitation, attorneys&#146; 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.</FONT></FONT>
</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">9.
  <u>Assignability; Binding Nature.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT>
</P>
<P ALIGN="left"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.
  <u>Representation.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT>
</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">11.
  <u>Entire Agreement.</u></FONT></FONT> </P>
<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">12.
  <u>Amendment or Waiver.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">13.
  <u>Severability.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT>
</P>
<p align="center"><font size="2" face="Times New Roman, Times, serif">6</font></p>
<hr width="100%" size="2">
<P align="left" style="page-break-before:always">&nbsp;</P>

<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">14.
  <u>Reasonableness.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">15.
  <u>Survivorship.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">16.
  <u>Governing Law.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT>
</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">17.
  <u>Notices.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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&#146;s records or at such other address as such
  party may give notice of.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">18.
  <u>Headings.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">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.</FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">19.
  <u>Counterparts.</u></FONT></FONT> </P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">This
  Agreement may be executed in two or more counterparts.</FONT></FONT> </P>

<p align="center"><font size="2" face="Times New Roman, Times, serif">7</font></p>
<hr width="100%" size="2">
<P align="left" style="page-break-before:always">&nbsp;</P>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"></FONT></FONT>&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">IN
  WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
  first written above.</FONT></FONT> </P>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td>&nbsp;</td>
    <td colspan="2" nowrap><font size="2" face="Times New Roman, Times, serif">MFA
      MORTGAGE INVESTMENTS, INC.</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="5%" nowrap><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="30%" nowrap><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="left" nowrap><font size="2" face="Times New Roman, Times, serif">By:&nbsp;</font></td>
    <td nowrap><u><font size="2" face="Times New Roman, Times, serif">/s/ Stewart
      Zimmerman</font></u></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="left" nowrap><font size="2" face="Times New Roman, Times, serif">Name:
      &nbsp;</font></td>
    <td nowrap><font size="2" face="Times New Roman, Times, serif">Stewart Zimmerman</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="left" nowrap><font size="2" face="Times New Roman, Times, serif">Title:
      &nbsp;</font></td>
    <td nowrap><font size="2" face="Times New Roman, Times, serif">President and
      Chief Executive Officer</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" nowrap><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td nowrap><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" nowrap><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td nowrap><u><font size="2" face="Times New Roman, Times, serif">/s/ Ronald
      A. Freydberg</font></u></td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td align="right" nowrap><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td nowrap><font size="2" face="Times New Roman, Times, serif">Ronald A. Freydberg</font></td>
  </tr>
</table>
<p align="center"><font size="2" face="Times New Roman, Times, serif">8</font></p>
<hr width="100%" size="2">
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