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Exhibit 10.8
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 TERESA D.
COVELLO (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 January 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
January 1, 2008, shall continue until December 31,
2009. 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 her 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 Senior
Vice President, Chief Accounting Officer and Treasurer of MFA,
reporting to the Chief Financial Officer of MFA (the "CFO"), 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 Chairman and Chief
Executive Officer of MFA (the "CEO") and/or the CFO.
(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, the CFO 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 her ability and shall devote
substantially all of her time and efforts to her employment and the
performance of her duties under this Agreement. Nothing
herein shall preclude the Executive from engaging in charitable and
community affairs and managing her personal financial and legal
affairs, so long as such activities do not materially interfere
with her carrying out her 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 $250,000
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 (the “Performance Bonus”) in
such amount as shall be recommended by the CEO and/or the CFO and
approved by the Compensation Committee of the Board of Directors
(the "Compensation Committee") or the Board of Directors, as
the case may be. The Performance Bonus shall be paid as
soon as practicable after it is vested and nonforfeitable, but in
no event later than January 16th of the next following calendar
year.
(c) 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.
(d) 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 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 the
Executive in connection with her employment. 2
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, her legal representative or her
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, her legal representative or her
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, her legal representative or her 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 her 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 her 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 her 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
her 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 (which shall include any non-renewal of this
Agreement by MFA pursuant to Paragraph 1(b)) 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 her 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 (which shall include any non-renewal of this
Agreement by MFA pursuant to Paragraph 1(b)) or the Executive's
resignation of her 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
the termination of employment occurs, an amount equal to
250% of the sum of (a) the Executive's then current Base
Salary, and (b) the Executive's highest bonus for the two
preceding years; 3
(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 and her 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. 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 her 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, she 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
her under this Agreement on account of any remuneration
attributable to any subsequent employment that she may obtain.
4
(g) Payments
Subject to Section 409A. Notwithstanding anything
herein to the contrary, the Executive shall not be entitled to any
payment pursuant to this Paragraph 5 prior to the earliest
date permitted under Section 409A of the Code, and applicable
Treasury regulations thereunder. To the extent any
payment pursuant to this Paragraph 5 is required to be delayed
six months pursuant to the special rules of Section 409A of
the Code related to "specified employees," each affected payment
shall be delayed until six months after the Executive's termination
of employment, and, unless provided otherwise, with the first
such payment being a lump sum equal to the aggregate
payments the Executive would have received during such
six-month period if no payment delay had been imposed. Any
payments or distributions delayed in accordance with the prior
sentence shall be paid to the Executive on the first day of the
seventh month following the Executive’s termination of
employment. Notwithstanding any other provision
contained herein, to the extent any payments or distributions due
to the Executive upon termination of her employment under this
Agreement are subject to Section 409A of the Code (i) a termination
of the Executive’s employment shall be interpreted in a
manner that is consistent with the definition of a
“separation from service” under Section 409A of the
Code and the applicable Treasury regulations thereunder and (ii) as
applicable, such payments shall be treated as a series of separate
payments for purposes of Section 409A of the Code.
(h) Mutual
Release. MFA’s obligation to make any payment or
provide any benefit pursuant to this Paragraph 5 shall be
contingent upon, and is the consideration for, the Executive
executing and delivering to MFA a general release (the
“Release”), substantially in the form annexed hereto as
Exhibit A, releasing MFA, and all current and former members,
officers and employees of MFA, from any claims relating to the
Executive’s employment hereunder, other than claims relating
to continuing obligations under, or preserved by, (x) this
Agreement or (y) any compensation or benefit plan, program or
arrangement in which the Executive was participating as of the date
of termination of her employment, and no such amounts shall be
provided until the Executive executes and delivers to MFA a letter
which provide
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