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Exhibit 10.5 AMENDED AND RESTATED EMPLOYMENT
AGREEMENT THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(this “Agreement”) is entered into as of the 10th day
of December, 2008 by and between MFA MORTGAGE INVESTMENTS, INC., a
Maryland corporation (“MFA”), and WILLIAM S. GORIN (the
“Executive”). W I T N E S S E T H:
WHEREAS, MFA and the Executive entered into an amended and restated
employment agreement, effective as of July 1, 2008 (the
“Employment Agreement”); WHEREAS, MFA and the
Executive desire to amend the terms of the Executive’s
employment to comply with the documentary requirements of Section
409A of the Internal Revenue Code of 1986, as amended (the
“Code”); and WHEREAS, the Executive wishes to
continue serving MFA and MFA wishes to secure the continued
exclusive services of the Executive under the terms and conditions
described below. NOW THEREFORE, in consideration of the
foregoing premises and the mutual agreements herein contained, the
parties hereto agree to amend and restate the Employment Agreement
in its entirety to read as follows:
1. Term
of Employment.
(a) MFA
hereby employs the Executive, and the Executive hereby accepts
employment with MFA, in the positions and with the duties and
responsibilities as set forth in Paragraph 2 below for the
Term of Employment, subject to the terms and conditions of this
Agreement.
(b) The
term of employment (the “Term of Employment”) under
this Agreement shall include the Initial Term and each Renewal
Term. The Initial Term, which commenced on July 1,
2008, shall continue until December 31, 2011. 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. Notwithstanding the foregoing sentences of
this Paragraph 1(b), the Term of Employment may be terminated
before the expiration of the Initial Term or any Renewal Term in
accordance with Paragraph 5 hereof.
2. Position;
Duties and Responsibilities.
(a) During
the Term of Employment, the Executive shall be employed as
President and Chief Financial Officer of MFA, reporting to the
Chairman and Chief Executive Officer of MFA (the
“CEO”), with such duties and day-to-day management
responsibilities as are customarily performed by persons holding
such offices at similarly situated mortgage REITs and such other
duties as may be mutually agreed upon between the Executive and the
CEO.
(b) During
the Term of Employment, the Executive shall, without additional
compensation, also (i) serve on the board of directors of,
serve as an officer of, and/or perform such executive and
consulting services for, or on behalf of, such subsidiaries or
affiliates of MFA as the CEO and/or the Board of Directors of MFA
(the “Board of Directors”) may, from time to time,
request. MFA and such subsidiaries and affiliates are
hereinafter referred to, collectively, as the
“Company.” For purposes of this Agreement,
the term “affiliate” shall have the meaning ascribed
thereto in Rule 12b-2 under the Securities Exchange Act of
1934, as amended (the “Act”).
(c) During
the Term of Employment, the Executive shall serve MFA faithfully,
diligently and to the best of his ability and shall devote
substantially all of his time and efforts to his employment and the
performance of his duties under this Agreement. Nothing
herein shall preclude the Executive from engaging in charitable and
community affairs and managing his personal, financial and legal
affairs, so long as such activities do not materially interfere
with his carrying out his duties and responsibilities under this
Agreement.
3. Compensation.
(a) Base
Salary. During the Term of Employment, the Executive
shall be entitled to receive an annualized base salary (the
“Base Salary”) of not less than eight hundred thousand
dollars ($800,000).
(b) Restricted
Stock Award. In connection with the Executive’s
new duties and responsibilities, the Executive shall receive an
award of 100,000 shares of restricted stock on the date
hereof. The period of restriction with respect to such
award shall begin on the date hereof and shall lapse with respect
to 6,250 shares on the last business day of each quarter ending
after the date hereof (with all restrictions having lapsed on
June 30, 2012). Under the terms of the definitive
award agreement, the Executive shall be entitled to receive any
dividends payable with respect to any shares subject to restriction
at such time as such shares are no longer subject to
restrictions. Vested shares of such restricted stock
cannot be transferred or sold during the Executive’s
employment by MFA until the value of the Executive’s stock
holdings in MFA (including shares of restricted stock) exceeds four
times the Executive’s Base Salary; and, following the
termination of Executive’s employment with the Company,
vested shares of such restricted stock may not be sold or
transferred to the extent the value of the Executive’s stock
holdings does not exceed four times the Executive’s Base
Salary as of the date of the Executive’s termination of
employment (provided, however, that this sentence shall no longer
apply following the six-month anniversary of the Executive’s
termination of employment).
(c) Performance
Bonus. The CEO, President and Executive Vice President
shall be eligible to participate in a Performance Bonus Pool for
Senior Executives (the “Bonus Pool”) each year during
the Term of Employment. The aggregate Bonus Pool shall
be determined by reference to MFA’s Return on Average Equity
(“ROAE”) as more fully described in Exhibit A to
this Agreement. Subject to the right of the Compensation
Committee of the Board of Directors (the “Compensation
Committee”) to determine the portion of the Bonus Pool to be
allocated to the CEO, allocations as between the President and
Executive Vice President, if any, shall be made by the Compensation
Committee together with the CEO based upon each participants
performance during the applicable period. The
Compensation Committee, in its discretion, can adjust the aggregate
Bonus Pool upward or downward in any year by as much as thirty
percent (30%) depending upon the Compensation
Committee’s assessment of MFA’s leverage strategy,
share price performance relative to the S&P financial index or
other relevant indices, share price relative to peer group, total
return (share price change plus dividend), and its other asset
management activities, as well as the Executive’s individual
performance, among other considerations, as determined by the
Compensation Committee. - 2 -
The amount allocated to the Executive from the Bonus Pool
shall be paid in a combination of cash and restricted stock based
on the total Bonus Pool (after any reduction or increase referred
in the immediately-preceding paragraph), as
follows: (i) Bonus Pool (as adjusted) up to
$2,700,000: seventy-five percent (75%) will be paid
in cash and twenty-five (25%) percent will be paid in restricted
stock; (ii) the incremental total Bonus Pool (as adjusted)
between $2,700,000 and $4,050,000: sixty-five
percent (65%) will be paid in cash and thirty-five percent
(35%) will be paid in restricted stock; (iii) the
incremental total Bonus Pool (as adjusted) in excess of
$4,050,000: fifty percent (50%) will be paid in cash and
fifty percent (50%) will be paid in restricted stock. In
each case referred to above, the period of restriction with respect
to the applicable shares of restricted stock shall lapse with
respect to six and one quarter percent (6.25%) of the shares on the
last business day of each quarter commencing with the quarter
beginning with the first calendar quarter following the end of the
fiscal year to which the Bonus Pool relates, with the lapse of all
restrictions occurring four years following the date of
grant. Under the terms of the definitive award
agreement, the Executive shall be entitled to receive any dividends
payable with respect to any shares subject to restriction at such
time as such shares are no longer subject to
restrictions. Vested shares of such restricted stock
cannot be transferred or sold during the Executive’s
employment by MFA until the value of the Executive’s stock
holdings in MFA (including shares of restricted stock) exceeds four
times the Executive’s Base Salary; and, following the
termination of Executive’s employment with the Company,
vested shares of such restricted stock may not be sold or
transferred to the extent the value of the Executive’s stock
holdings does not exceed four times the Executive’s Base
Salary as of the date of the Executive’s termination of
employment (provided, however, that this sentence shall no longer
apply following the six-month anniversary of the Executive’s
termination of employment). Cash payments from the Bonus Pool will
be made as soon as practicable after such portion of the Bonus Pool
is vested and nonforfeitable, and in no event later than January
16th of the next following calendar year.
(d) Equity
Compensation. The Executive shall be eligible to receive
such stock option, restricted stock, phantom share or dividend
equivalent rights grants or other equity awards as the Compensation
Committee or the Board of Directors, as the case may be, shall deem
appropriate.
(e) Discretion
to Increase Compensation. Nothing in this Agreement
shall preclude the Board of Directors or the Compensation Committee
from increasing or considering increasing the Executive’s
compensation during the Term of Employment. The Base
Salary as adjusted to reflect any increase shall be the Base Salary
for all purposes of this Agreement.
4. Employee
Benefit Programs and Fringe Benefits. During the Term of
Employment, the Executive shall be entitled to five weeks of
vacation each calendar year and to participate in all executive
incentive and employee benefit programs of MFA now or hereafter
made available to MFA’s senior executives or salaried
employees generally, as such programs may be in effect from time to
time. MFA shall reimburse the Executive for any and all
necessary, customary and usual business expenses, properly
receipted in accordance with MFA’s policies, incurred by
Executive in connection with his employment.
5. Termination
of Employment.
(a) Termination
Due to Death or Disability. If the Executive’s
employment is terminated during the Term of Employment by reason of
the Executive’s death or Disability, the Executive’s
Term of Employment shall terminate automatically without further
obligations to the Executive, his legal representative or his
estate, as the case may be, under this Agreement except for
(i) any compensation earned but not yet paid, including and
without limitation, any amount of Base Salary accrued or earned but
unpaid and any other payments payable to the Executive pursuant to
Paragraph 5(e) below, which amounts shall be promptly paid in
a lump sum to the Executive, his legal representative or his
estate, as the case may be, and (ii) a lump sum payment in an
amount equal to the Executive’s Base Salary which shall be
paid to the Executive, his legal representative or his estate, as
the case may be, as soon as possible (without undue delay), but in
no event later than March 15th following the calendar
year in which such termination occurs. In the event of
such termination due to his Disability, Executive’s health
insurance coverage shall be continued at MFA’s expense for
the duration of such Disability; provided, that, if such coverage
cannot be provided under MFA’s health insurance policy for
the duration of such Disability, such coverage or the cost of
comparable coverage shall be provided by MFA until the
Executive’s attainment of age 65 or such later date through
which coverage is permissible under MFA’s health insurance
policy. - 3 -
(b) Termination
Without Cause or for Good Reason. In the event the
Executive’s employment is terminated by MFA without Cause
(including by notice of MFA’s determination not to renew the
Initial Term or any Renewal Term pursuant to Paragraph 1(b))
or by the Executive for Good Reason, unless any such termination is
preceded by the Executive’s giving notice of his
determination not to renew the Initial Term or any Renewal Term
pursuant to Paragraph 1(b), the Executive shall be entitled to
both (i) a payment (referred to below as the “Severance
Amount”) equal to the amount of his then current Base Salary
that would be payable from the date of such termination through the
later of (A) the expiration of the Term of Employment and (B) the
first anniversary of such termination of employment (the period
with respect to which the Severance Amount is payable, the
“Severance Period”) and (ii) continued health insurance
coverage at MFA’s expense, for the Severance
Period. Fifty percent of the Severance Amount shall be
paid within five (5) days after the date the Executive’s
employment is terminated as described above, and the remaining 50%
of the Severance Amount shall be paid in three equal monthly
installments beginning on the first business day of the month
following the month of such termination; provided, however, in no
event shall any portion of the Severance Amount be payable after
March 15th of the year following the year in which such termination
occurs.
(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 a Change in
Control and following the occurrence of a Pre-Change-in-Control
Event, (2) the resignation of his employment by the Executive
for any reason within two and one half months following a Change in
Control, or (3) the termination of the Executive’s
employment by MFA other than for Cause or the Executive’s
resignation of his employment for Good Reason within twelve months
following a Change in Control,
(i) MFA
shall immediately pay to Executive in a lump sum, but in all events
within two and one half months following the calendar year in which
such termination of employment occurs, an amount equal to 300% of
the sum of (a) the Executive’s then current Base Salary
and (b) the Executive’s highest bonus for the two
preceding years;
(ii) all
of the Executive’s outstanding restricted stock, phantom
shares and stock options shall immediately vest in full and such
options shall remain exercisable, and any dividend equivalents
associated therewith shall continue to be payable, until the
earlier of (a) 90 days following the date of such termination
and (b) the date on which each such option would have expired
had the Executive’s employment not terminated; and
(iii) the
Executive shall continue to participate in all health, life
insurance, retirement and other benefit programs at MFA’s
expense for the balance of the Term of Employment, to the same
extent as though the Executive’s employment had not
terminated. - 4 -
To the extent necessary to avoid imposition of the excise
tax under Section 4999 of the Code in connection with a Change in
Control, the amounts payable or benefits to be provided to the
Executive shall be reduced such that the reduction of compensation
to be provided to the Executive is minimized. In
applying this principle, the reduction shall be made in a manner
consistent with the requirements of Section 409A of the Code, and
where two economically equivalent amounts are subject to reduction
but payable at different times, such amounts shall be reduced on a
pro rata basis (but not below zero).
(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 or
appreciation in value of such deferred amounts) in accordance with
the applicable plan documents;
(iii) reimbursement
for reasonable business expenses incurred but not yet reimbursed by
MFA;
(iv) any other
benefits to which the Executive or his legal representative may be
entitled under the 2004 Equity Compensation Plan and under all
other applicable plans and programs of MFA, as provided in
Paragraph 4 above; and
(v) upon
the termination of the Executive’s employment pursuant to
Paragraphs 5(a) or 5(b) above, all of the
Executive’s outstanding restricted stock, phantom shares and
stock options shall immediately vest in full and such options shall
remain exercisable, and any dividend equivalents associated
therewith shall continue to be payable until the earlier of
(a) 90 days following the date of such termination and
(b) the date on which each such option would have expired had
the Executive’s employment not terminated.
(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.
(g) Payments
Subject to Section&nb
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