Published on May 10, 2010
MFA
FINANCIAL, INC.
AMENDED
AND RESTATED
2010
EQUITY COMPENSATION PLAN
1. PURPOSE. The
Plan is intended to provide incentives to key employees, officers, directors and
others expected to provide significant services to the Company, including the
employees, officers and directors of the other Participating Companies, to
encourage a proprietary interest in the Company, to encourage such key employees
to remain in the employ of the Company and the other Participating Companies, to
attract new employees with outstanding qualifications, and to afford additional
incentive to others to increase their efforts in providing significant services
to the Company and the other Participating Companies. In furtherance
thereof, the Plan permits awards of equity-based incentives to key employees,
officers and directors of, and certain other providers of services to, the
Company or any other Participating Company. The Plan amends and
restates the Amended and Restated 2004 Equity Compensation Plan, which was
initially approved by the stockholders of the Company on May 27, 2004 and which
was thereafter amended as of December 10, 2008.
2. DEFINITIONS. As
used in this Plan, the following definitions apply (provided that, in the case
of capitalized terms used in Agreements to prior versions of the Plan, which
terms have been replaced by capitalized terms defined herein, the capitalized
terms in such Agreements shall, as the context so requires, have the respective
meanings ascribed herein to such replacement terms):
"Act"
shall mean the Securities Act of 1933, as amended.
"Agreement"
shall mean a written agreement entered into between the Company and a Grantee
pursuant to the Plan.
"Board"
shall mean the Board of Directors of the Company.
"Cause"
shall mean, unless otherwise provided in the Grantee's Agreement, (i) engaging
in (A) willful or gross misconduct or (B) willful or gross neglect, (ii)
repeatedly failing to adhere to the directions of superiors or the Board or the
written policies and practices of the Company, (iii) the commission of a felony
or a crime of moral turpitude, or any crime involving the Company, (iv) fraud,
misappropriation, embezzlement or material or repeated insubordination, (v) a
material breach of the Grantee's employment agreement (if any) with the Company
(other than a termination of employment by the Grantee), or (vi) any illegal act
detrimental to the Company; all as determined by the Committee.
"Code"
shall mean the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.
"Committee"
shall mean the Compensation Committee of the Company as appointed by the Board
in accordance with Section 4 of the Plan; provided, however, that the Committee
shall at all times consist solely of persons who, at the time of their
appointment, each qualified as a "Non-Employee Director" under Rule
16b-3(b)(3)(i) promulgated under the Exchange Act and, to the extent that relief
from the limitation of Section 162(m) of the Code is sought, as an "Outside
Director" under Section 1.162-27(e)(3)(i) of the Treasury
Regulations.
"Common
Stock" shall mean the Company's common stock, par value $0.01 per share, either
currently existing or authorized hereafter.
"Company"
shall mean MFA Financial, Inc., a Maryland corporation.
"DER"
shall mean a right awarded under Section 11 of the Plan to receive (or have
credited) the equivalent value (in cash or Shares) of dividends paid on Common
Stock.
"Disability"
shall mean, unless otherwise provided by the Committee in the Grantee's
Agreement, the occurrence of an event which would entitle the Grantee to the
payment of disability income under one of the Company's approved long-term
disability income plans or a long-term disability as determined by the Committee
in its absolute discretion pursuant to any other standard as may be adopted by
the Committee. Notwithstanding the foregoing, no circumstances or
condition shall constitute a Disability to the extent that, if it were, a 20%
tax would be imposed under Section 409A of the Code; provided that, in such a
case, the event or condition shall continue to constitute a Disability to the
maximum extent possible (e.g., if applicable, in respect of vesting without an
acceleration of distribution) without causing the imposition of such 20%
tax. Nothing herein shall limit or restrict the payment of any amount
subject to Section 409A of the Code upon an otherwise permitted payment event
under Section 409A of the Code, including upon a Termination of
Service.
"Eligible
Persons" shall mean officers, directors and employees of the Participating
Companies and other persons expected to provide significant services (of a type
expressly approved by the Committee as covered services for these purposes) to
one or more of the Participating Companies. For purposes of the Plan,
a consultant, vendor, customer or other provider of significant services to the
Company or any other Participating Company shall be deemed to be an Eligible
Person, but will be eligible to receive Grants (but in no event Incentive Stock
Options), only after a finding by the Committee in its discretion that the value
of the services rendered or to be rendered to the Participating Company is at
least equal to the value of the Grants being awarded.
"Employee"
shall mean an individual, including an officer of a Participating Company, who
is employed (within the meaning of Code Section 3401 and the regulations
thereunder) by the Participating Company.
"Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exercise
Price" shall mean the price per Share of Common Stock, determined by the Board
or the Committee, at which an Option may be exercised.
"Fair
Market Value" shall mean the value of one share of Common Stock, determined as
follows:
|
(i)
|
If
the Shares are then listed on a national stock exchange, the closing sales
price per Share on the exchange for the last preceding date on which there
was a sale of Shares on such exchange, as determined by the
Committee.
|
|
(ii)
|
If
the Shares are not then listed on a national stock exchange but are then
traded on an over-the-counter market, the average of the closing bid and
asked prices for the Shares in such over-the-counter market for the last
preceding date on which there was a sale of such Shares in such market, as
determined by the Committee.
|
|
(iii)
|
If
neither (i) nor (ii) applies, such value as the Committee in its
discretion may in good faith determine. Notwithstanding the
foregoing, where the Shares are listed or traded, the Committee may make
discretionary determinations in good faith where the Shares have not been
traded for 10 trading days.
|
- 2
- -
Notwithstanding
the foregoing, with respect to any “stock right” within the meaning of Section
409A of the Code, Fair Market Value shall not be less than the “fair market
value” of the Shares determined in accordance with Treasury Regulation
1.409A-1(b)(iv).
"Grant"
shall mean the issuance of an Incentive Stock Option, Non-qualified Stock
Option, Restricted Stock, Phantom Share, DER, other equity-based grant as
contemplated herein or any combination thereof as applicable to an Eligible
Person. The Committee will determine the eligibility of employees,
officers, directors and others expected to provide significant services to the
Participating Companies based on, among other factors, the position and
responsibilities of such individuals, the nature and value to the Participating
Company of such individuals' accomplishments and potential contribution to the
success of the Participating Company whether directly or through its
subsidiaries.
"Grantee"
shall mean an Eligible Person to whom Options, Restricted Stock, Phantom
Shares, DERs or other equity-based awards are granted
hereunder.
"Incentive
Stock Option" shall mean an Option of the type described in Section 422(b) of
the Code issued to an Employee.
"Non-qualified
Stock Option" shall mean an Option not described in Section 422(b) of the
Code.
"Option"
shall mean any option, whether an Incentive Stock Option or a Non-qualified
Stock Option, to purchase, at a price and for the term fixed by the Committee in
accordance with the Plan, and subject to such other limitations and restrictions
in the Plan and the applicable Agreement, a number of Shares determined by the
Committee.
"Optionee"
shall mean any Eligible Person to whom an Option is granted, or the Successors
of the Optionee, as the context so requires.
"Participating
Companies" shall mean the Company and any of its Subsidiaries which with the
consent of the Board participates in the Plan.
"Phantom
Share" shall mean a right, pursuant to the Plan, of the Grantee to payment of
the Phantom Share Value.
"Phantom
Share Value," per Phantom Share, shall mean the Fair Market Value of a Share or,
if so provided by the Committee, such Fair Market Value to the extent in excess
of a base value established by the Committee at the time of grant.
"Plan"
shall mean the Company's Amended and Restated 2010 Equity Compensation Plan, as
set forth herein, and as the same may from time to time be amended.
"Purchase
Price" shall mean the Exercise Price times the number of Shares with respect to
which an Option is exercised.
"Restricted
Stock" shall mean an award of Shares that are subject to restrictions
hereunder.
"Retirement"
shall mean, unless otherwise provided by the Committee in the Grantee's
Agreement, the Termination of Service (other than for Cause) of a
Grantee:
|
(i)
|
on
or after the Grantee's attainment of age
65;
|
- 3
- -
|
(ii)
|
on
or after the Grantee's attainment of age 55 with five consecutive years of
service with the Participating Companies;
or
|
|
(iii)
|
as
determined by the Committee in its absolute discretion pursuant to such
other standard as may be adopted by the
Committee.
|
"Shares"
shall mean shares of Common Stock of the Company, adjusted in accordance with
Section 15 of the Plan (if applicable).
"Subsidiary"
shall mean any corporation, partnership or other entity at least 50% of the
economic interest in the equity of which is owned, directly or indirectly, by
the Company or by another subsidiary.
"Successors
of the Optionee" shall mean the legal representative of the estate of a deceased
Optionee or the person or persons who shall acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of the
Optionee.
"Termination
of Service" shall mean the time when the employee-employer relationship or
directorship, or other service relationship (sufficient to constitute service as
an Eligible Person), between the Grantee and the Participating Companies is
terminated for any reason, with or without Cause, including, but not limited to,
any termination by resignation, discharge, death or Retirement; provided,
however, Termination of Service shall not include a termination where there is a
simultaneous reemployment of the Grantee by a Participating Company or other
continuation of service (sufficient to constitute service as an Eligible Person)
for a Participating Company. The Committee, in its absolute
discretion, shall determine the effects of all matters and questions relating to
Termination of Service, including, but not limited to, the question of whether
any Termination of Service was for Cause and all questions of whether particular
leaves of absence constitute Terminations of Service. For this
purpose, the service relationship shall be treated as continuing intact while
the Grantee is on military leave, sick leave or other bona fide leave of absence
(to be determined in the discretion of the
Committee). Notwithstanding the foregoing, with respect to any Grant
that is subject to Section 409A of the Code, Termination of Service shall be
interpreted in a manner that is consistent with the definition of a “separation
from service” under Section 409A of the Code and Treasury Regulation
1.409A-1(h).
3. EFFECTIVE
DATE. The effective date of this restatement of the Plan shall be the
date on which it is approved by the holders of the requisite percentage of
shares of Common Stock, at a meeting duly called for such
purpose. The Plan shall terminate on, and no award shall be granted
hereunder on or after, the 10-year anniversary of the approval of the Plan by
the stockholders of the Company; provided, however, that the Board may at any
time prior to that date terminate the Plan.
4. ADMINISTRATION.
a. Membership
on Committee. The Plan shall be administered by the Committee
appointed by the Board. If no Committee is designated by the Board to
act for those purposes, the full Board shall have the rights and
responsibilities of the Committee hereunder and under the
Agreements.
b. Committee
Meetings. The acts of a majority of the members present at any
meeting of the Committee at which a quorum is present, or acts approved in
writing by a majority of the entire Committee, shall be the acts of the
Committee for purposes of the Plan. If and to the extent applicable,
no member of the Committee may act as to matters under the Plan specifically
relating to such member.
- 4
- -
c. Grant
of Awards.
|
(i)
|
The
Committee shall from time to time at its discretion select the Eligible
Persons who are to be issued Grants and determine the number and type of
Grants to be issued under any Agreement to an Eligible
Person. In particular, the Committee shall (A) determine the
terms and conditions, not inconsistent with the terms of the Plan, of any
Grants awarded hereunder (including, but not limited to the performance
goals and periods applicable to the award of Grants); (B) determine
the time or times when and the manner and condition in which each Option
shall be exercisable and the duration of the exercise period; and (C)
determine or impose other conditions to the Grant or exercise of Options
under the Plan as it may deem appropriate. The Committee may
establish such rules, regulations and procedures for the administration of
the Plan as it deems appropriate, determine the extent, if any, to which
Options, Phantom Shares, Shares (whether or not Shares of Restricted
Stock), DERs or other equity-based awards shall be forfeited (whether or
not such forfeiture is expressly contemplated hereunder), and take any
other actions and make any other determinations or decisions that it deems
necessary or appropriate in connection with the Plan or the administration
or interpretation thereof. The Committee shall also cause each
Option to be designated as an Incentive Stock Option or a Non-qualified
Stock Option, except that no Incentive Stock Options may be granted to an
Eligible Person who is not an Employee of the Company. The
Grantee shall take whatever additional actions and execute whatever
additional documents the Committee may in its reasonable judgment deem
necessary or advisable in order to carry or effect one or more of the
obligations or restrictions imposed on the Grantee pursuant to the express
provisions of the Plan and the Agreement. DERs will be
exercisable separately or together with Options, and paid in cash or other
consideration at such times and in accordance with such rules, as the
Committee shall determine in its discretion. Unless expressly
provided hereunder, the Committee, with respect to any Grant, may exercise
its discretion hereunder at the time of the award or
thereafter. The Committee shall have the right and
responsibility to interpret the Plan and the interpretation and
construction by the Committee of any provision of the Plan or of any Grant
thereunder, including, without limitation, in the event of a dispute,
shall be final and binding on all Grantees and other persons to the
maximum extent permitted by law. Without limiting the
generality of Section 23, no member of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or
any Grant hereunder.
|
|
(ii)
|
Notwithstanding
clause (i) of this Section 4(c) and Section 7(a), any award under the Plan
to an Eligible Person who is a member of the Committee shall be made by
the full Board, but for these purposes the directors of the Corporation
who are on the Committee shall be required to be recused in respect of
such awards and shall not be permitted to
vote.
|
d. Awards.
|
(i)
|
Agreements. Grants
to Eligible Persons shall be evidenced by written Agreements in such form
as the Committee shall from time to time determine. Such
Agreements shall comply with and be subject to the terms and conditions
set forth herein.
|
|
(ii)
|
Number
of Shares. Each Grant issued to an Eligible Person shall state
the number of Shares to which it pertains or which otherwise underlie the
Grant and shall provide for the adjustment thereof in accordance with the
provisions of Section 15 hereof.
|
|
(iii)
|
Grants. Subject
to the terms and conditions of the Plan and consistent with the Company's
intention for the Committee to exercise the greatest permissible
flexibility under Rule 16b-3 under the Exchange Act in awarding Grants,
the Committee shall have the power:
|
- 5
- -
|
(1)
|
to
determine from time to time the Grants to be issued to Eligible Persons
under the Plan and to prescribe the terms and provisions (which need not
be identical) of Grants issued under the Plan to such
persons;
|
|
(2)
|
to
construe and interpret the Plan and the Grants thereunder and to
establish, amend and revoke the rules, regulations and procedures
established for the administration of the Plan. In this
connection, the Committee may correct any defect or supply any omission,
or reconcile any inconsistency in the Plan, in any Agreement, or in any
related agreements, in the manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective. All
decisions and determinations by the Committee in the exercise of this
power shall be final and binding upon the Participating Companies and the
Grantees;
|
|
(3)
|
to
amend any outstanding Grant, subject to Section 17, and to accelerate or
extend the vesting or exercisability of any Grant (in compliance with
Section 409A of the Code, if applicable) and to waive conditions or
restrictions on any Grants, to the extent it shall deem appropriate;
and
|
|
(4)
|
generally
to exercise such powers and to perform such acts as are deemed necessary
or expedient to promote the best interests of the Company with respect to
the Plan.
|
|
(iv)
|
Any
Grant awarded after the effective date of this Plan is subject to
mandatory repayment by the Grantee to the Company to the extent the
Grantee is or in the future becomes subject to any Company “clawback” or
recoupment policy that requires the repayment by the Grantee to the
Company of compensation paid by the Company to the Grantee in the event
that the Grantee fails to comply with, or violates, the terms or
requirements of such policy.
|
5. PARTICIPATION.
a. Eligibility. Only
Eligible Persons shall be eligible to receive Grants under the
Plan.
b. Limitation
of Ownership. No Grants shall be issued under the Plan to any person
who after such Grant would beneficially own more than 9.8% of the outstanding
shares of Common Stock of the Company, unless the foregoing restriction is
expressly and specifically waived by action of the independent directors of the
Board.
c. Stock
Ownership. For purposes of Section 5(b) above, in determining stock
ownership a Grantee shall be considered as owning the stock owned, directly or
indirectly, by or for his brothers, sisters, spouses, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be considered as being owned
proportionately by or for its stockholders, partners or
beneficiaries. Stock with respect to which any person holds an Option
shall be considered to be owned by such person.
d. Outstanding
Stock. For purposes of Section 5(b) above, "outstanding shares" shall
include all stock actually issued and outstanding immediately after the issue of
the Grant to the Grantee. With respect to the stock ownership of any
Grantee, "outstanding shares" shall include shares authorized for issue under
outstanding Options held by such Grantee, but not options held by any other
person.
- 6
- -
6. STOCK. Subject
to adjustments pursuant to Section 15, Grants with respect to an aggregate of no
more than 13,500,000 Shares may be granted under the Plan (all of which may be
issued as Options). Subject to adjustments pursuant to Section 15,
(i) the maximum number of Shares with respect to which any Options may be
granted in any one year to any Grantee shall not exceed 1,500,000, and
(ii) the maximum number of Shares that may underlie Grants, other than
Grants of Options, in any one year to any Grantee shall not exceed
1,500,000. Notwithstanding the first sentence of this Section 6,
(i) Shares that have been granted as Restricted Stock or that have been
reserved for distribution in payment for Options or Phantom Shares but are later
forfeited or for any other reason are not payable under the Plan; and
(ii) Shares as to which an Option is granted under the Plan that remains
unexercised at the expiration, forfeiture or other termination of such Option,
may be the subject of the issue of further Grants. Shares of Common
Stock issued hereunder may consist, in whole or in part, of authorized and
unissued shares, treasury shares or previously issued Shares under the
Plan. The certificates for Shares issued hereunder may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer hereunder or under the Agreement, or as the Committee may otherwise
deem appropriate. Shares subject to DERs, other than DERs based
directly on the dividends payable with respect to Shares subject to Options or
the dividends payable on a number of Shares corresponding to the number of
Phantom Shares awarded, shall be subject to the limitation of this Section
6. Notwithstanding the limitations above in this Section 6, except in
the case of Grants intended to qualify for relief from the limitations of
Section 162(m) of the Code, there shall be no limit on the number of Phantom
Shares or DERs to the extent they are paid out in cash that may be granted under
the Plan. If any Phantom Shares or DERs are paid out in cash, the
underlying Shares may again be made the subject of Grants under the Plan,
notwithstanding the first sentence of this Section 6.
7. TERMS
AND CONDITIONS OF OPTIONS.
a. Initial
Awards to Compensation Committee Members. Subject to the other terms
of the Plan, each member of the Committee shall automatically be granted a
Non-qualified Stock Option to purchase shares of Common Stock and DERs upon the
date such person is initially appointed to the Committee, with such terms as may
be set forth in the applicable Agreement. Such awards shall be in the
amounts set forth in Exhibit A herein, as
may be amended from time to time. Each Option granted to a Committee
member under this Section 7(a) shall become exercisable commencing one year
after the date of Grant (unless otherwise provided in the applicable Agreement)
and shall expire 10 years thereafter. Such Options shall be subject
to adjustment as provided in Section 15; provided that such adjustment and any
action by the Board or the Committee with respect to the Plan and such Options
satisfies the requirements for exemption under Rule 16b-3 under the Exchange Act
and does not cause any member of the Committee to be disqualified as a
Non-Employee Director under such Rule. Notwithstanding the foregoing,
the Board may prospectively, from time to time, discontinue, reduce or increase
the amount of any or all of the Grants otherwise to be made under this Section
7(a).
b. Each
Agreement with an Eligible Person shall state the Exercise Price. The
Exercise Price for any Option shall not be less than the Fair Market Value on
the date of Grant.
c. Medium
and Time of Payment. Except as may otherwise be provided below, the
Purchase Price for each Option granted to an Eligible Person shall be payable in
full in United States dollars upon the exercise of the Option. In the
event the Company determines that it is required to withhold taxes as a result
of the exercise of an Option, as a condition to the exercise thereof, an
Employee may be required to make arrangements satisfactory to the Company to
enable it to satisfy such withholding requirements in accordance with Section
20. If the applicable Agreement so provides, or the Committee
otherwise so permits, the Purchase Price may be paid in one or a combination of
the following:
|
(i)
|
by
a certified or bank cashier's
check;
|
- 7
- -
|
(ii)
|
by
the surrender of shares of Common Stock in good form for transfer, owned
by the person exercising the Option and having a Fair Market Value on the
date of exercise equal to the Purchase Price, or in any combination of
cash and shares of Common Stock, as long as the sum of the cash so paid
and the Fair Market Value of the shares of Common Stock so surrendered
equals the Purchase Price;
|
|
(iii)
|
by
cancellation of indebtedness owed by the Company to the
Grantee;
|
|
(iv)
|
subject
to Section 17(e), by a loan or extension of credit from the Company
evidenced by a full recourse promissory note executed by the
Grantee. The interest rate and other terms and conditions of
such note shall be determined by the Committee (in which case the
Committee may require that the Grantee pledge his or her Shares to the
Company for the purpose of securing the payment of such note, and in no
event shall the stock certificate(s) representing such Shares be released
to the Grantee until such note shall have been paid in full);
or
|
|
(v)
|
by
any combination of such methods of payment or any other method acceptable
to the Committee in its discretion.
|
Except in
the case of Options exercised by certified or bank cashier's check, the
Committee may impose such limitations and prohibitions on the exercise of
Options as it deems appropriate, including, without limitation, any limitation
or prohibition designed to avoid accounting consequences which may result from
the use of Common Stock as payment upon exercise of an Option. Any
fractional shares of Common Stock resulting from a Grantee's election that are
accepted by the Company shall in the discretion of the Committee be paid in
cash.
d. Term
and Nontransferability of Grants and Options.
|
(i)
|
Each
Option under this Section 7 shall state the time or times which all or
part thereof becomes exercisable, subject to the following
restrictions.
|
|
(ii)
|
No
Option shall be exercisable except by the Grantee or a transferee
permitted hereunder.
|
|
(iii)
|
Except
if otherwise provided in an applicable Agreement, no Option shall be
assignable or transferable, except by will or the laws of descent and
distribution of the state wherein the Grantee is domiciled at the time of
his or her death; provided, however, that the Committee may (but need not)
permit other transfers, where the Committee concludes that such
transferability (i) does not result in accelerated taxation, (ii) does not
cause any Option intended to be an Incentive Stock Option to fail to be
described in Section 422(b) of the Code, (iii) complies with applicable
law, including securities law, and (iv) is otherwise appropriate and
desirable.
|
|
(iv)
|
No
Option shall be exercisable until such time as set forth in the applicable
Agreement (but in no event after the expiration of such
Grant).
|
- 8
- -
|
(v)
|
The
Committee may not modify, extend or renew any Option granted to any
Eligible Person unless such modification, extension or renewal shall
satisfy any and all applicable requirements of Rule 16b-3 under the
Exchange Act and Section 409A of the Code, to the extent
applicable. The foregoing notwithstanding, no modification of
an Option shall, without the consent of the Optionee, alter or impair any
rights or obligations under any Option previously
granted.
|
e. Termination
of Service, Except by Death, Retirement or Disability. Unless
otherwise provided in the applicable Agreement, upon any Termination of Service
for any reason other than his or her death, Retirement or Disability, an
Optionee shall have the right, subject to the restrictions of Section 4(c)
above, to exercise his or her Option at any time within three months after
Termination of Service, but only to the extent that, at the date of Termination
of Service, the Optionee’s right to exercise such Option had accrued pursuant to
the terms of the applicable Agreement and had not previously been exercised;
provided, however, that, unless otherwise provided in the applicable Agreement,
if there occurs a Termination of Service by a Participating Company for Cause or
a Termination of Service by the Optionee (other than on account of death,
Retirement or Disability), any Option not exercised in full prior to such
termination shall be canceled.
f. Death
of Optionee. Unless otherwise provided in the applicable Agreement,
if the Optionee of an Option dies while an Eligible Person or within three
months after any Termination of Service other than for Cause or a Termination of
Service by the Optionee (other than on account of death, Retirement or
Disability), and has not fully exercised the Option, then the Option may be
exercised in full, subject to the restrictions of Section 4(c) above, at anytime
within 12 months after the Optionee’s death, by the Successor of the Optionee,
but only to the extent that, at the date of death, the Optionee’s right to
exercise such Option had accrued and had not been forfeited pursuant to the
terms of the Agreement and had not previously been exercised.
g. Disability
or Retirement of Optionee. Unless otherwise provided in the
applicable Agreement, upon any Termination of Service for reason of his or her
Disability or Retirement, an Optionee shall have the right, subject to the
restrictions of Section 4(c) above, to exercise the Option at any time within 24
months after Termination of Service, but only to the extent that, at the date of
Termination of Service, the Optionee's right to exercise such Option had accrued
pursuant to the terms of the applicable Agreement and had not previously been
exercised.
h. Rights
as a Stockholder. An Optionee, a Successor of the Optionee, or the
holder of a DER shall have no rights as a stockholder with respect to any Shares
covered by his or her Grant until, in the case of an Optionee, the date of the
issuance of a stock certificate for such Shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in
Section 15.
i. Modification,
Extension and Renewal of Option. Within the limitations of the Plan,
and only with respect to Options granted to Eligible Persons, the Committee may
modify, extend or renew outstanding Options or accept the cancellation of
outstanding Options (to the extent not previously exercised) for the granting of
new Options in substitution therefor (but not including repricings, in the
absence of stockholder approval). The Committee may modify, extend or
renew any Option granted to any Eligible Person, unless such modification,
extension or renewal would not satisfy any applicable requirements of Rule 16b-3
under the Exchange Act and Section 409A of the Code. The foregoing
notwithstanding, no modification of an Option shall, without the consent of the
Optionee, alter or impair any rights or obligations under any Option previously
granted.
- 9
- -
j. Stock
Appreciation Rights. The Committee, in its discretion, may (taking
into account, without limitation, the application of Section 409A of the Code,
as the Committee may deem appropriate) also permit the Optionee to elect to
exercise an Option by receiving Shares, cash or a combination thereof, in the
discretion of the Committee and as may be set forth in the applicable Agreement,
with an aggregate Fair Market Value (or, to the extent of payment in cash, in an
amount) equal to the excess of the Fair Market Value of the Shares with respect
to which the Option is being exercised over the aggregate Purchase Price, as
determined as of the day the Option is exercised.
k. Deferral.
The Committee may establish a program (taking into account, without limitation,
the application of Section 409A of the Code, as the Committee may deem
appropriate) under which Optionees will have Phantom Shares subject to Section
10 credited upon their exercise of Options, rather than receiving Shares at that
time.
l. Other
Provisions. The Agreement authorized under the Plan may contain such
other provisions not inconsistent with the terms of the Plan (including, without
limitation, restrictions upon the exercise of the Option) as the Committee shall
deem advisable.
8. SPECIAL
RULES FOR INCENTIVE STOCK OPTIONS.
a. In
the case of Incentive Stock Options granted hereunder, the aggregate Fair Market
Value (determined as of the date of the Grant thereof) of the Shares with
respect to which Incentive Stock Options become exercisable by any Optionee for
the first time during any calendar year (under the Plan and all other plans
maintained by the Participating Companies, their parent or Subsidiaries) shall
not exceed $100,000.
b. In
the case of an individual described in Section 422(b)(6) of the Code (relating
to certain 10% owners), the Exercise Price with respect to an Incentive Stock
Option shall not be less than 110% of the Fair Market Value of a Share on the
day the Option is granted and the term of an Incentive Stock Option shall be no
more than five years from the date of grant.
c. If
Shares acquired upon exercise of an Incentive Stock Option are disposed of in a
disqualifying disposition within the meaning of Section 422 of the Code by an
Optionee prior to the expiration of either two years from the date of grant of
such Option or one year from the transfer of Shares to the Optionee pursuant to
the exercise of such Option, or in any other disqualifying disposition within
the meaning of Section 422 of the Code, such Optionee shall notify the Company
in writing as soon as practicable thereafter of the date and terms of such
disposition and, if the Company thereupon has a tax-withholding obligation,
shall pay to the Company an amount equal to any withholding tax the Company is
required to pay as a result of the disqualifying disposition.
9. PROVISIONS
APPLICABLE TO RESTRICTED STOCK.
a. Vesting
Periods. In connection with the grant of Restricted Stock, whether or
not Performance Goals apply thereto, the Committee shall establish one or more
vesting periods with respect to the shares of Restricted Stock granted, the
length of which shall be determined in the discretion of the Committee and set
forth in the applicable Agreement. Subject to the provisions of this Section 9,
the applicable Agreement and the other provisions of the Plan, restrictions on
Restricted Stock shall lapse if the Grantee satisfies all applicable employment
or other service requirements through the end of the applicable vesting
period.
b. Grant
of Restricted Stock. Subject to the other terms of the Plan, the Committee may,
in its discretion as reflected by the terms of the applicable Agreement: (i)
authorize the granting of Restricted Stock to Eligible Persons; (ii) provide a
specified purchase price for the Restricted Stock (whether or not the payment of
a purchase price is required by any state law applicable to the Company); (iii)
determine the restrictions applicable to Restricted Stock and (iv) determine or
impose other conditions to the grant of Restricted Stock under the Plan as it
may deem appropriate.
- 10
- -
c. Certificates.
|
(i)
|
In
the discretion of the Committee, each Grantee of Restricted Stock may be
issued a stock certificate in respect of Shares of Restricted Stock
awarded under the Plan. Any such certificate shall be
registered in the name of the Grantee. Without limiting the
generality of Section 6, in addition to any legend that might otherwise be
required by the Board or the Company’s charter, bylaws or other applicable
documents, the certificates for Shares of Restricted Stock issued
hereunder may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer hereunder or under the applicable
Agreement, or as the Committee may otherwise deem appropriate, and,
without limiting the generality of the foregoing, shall bear a legend
referring to the terms, conditions, and restrictions applicable to such
Grant, substantially in the following
form:
|
THE
TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY
ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE MFA
FINANCIAL, INC. AMENDED AND RESTATED 2010 EQUITY COMPENSATION PLAN, AND AN
AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND MFA FINANCIAL,
INC. COPIES OF SUCH PLAN AND AWARD AGREEMENT ARE ON FILE IN THE
OFFICES OF MFA FINANCIAL, INC. AT 350 PARK AVENUE, NEW YORK, NEW YORK
10022.
|
(ii)
|
The
Committee may require that any stock certificates evidencing such Shares
be held in custody by the Company or its designee until the restrictions
hereunder shall have lapsed and that, as a condition of any grant of
Restricted Stock, the Grantee shall have delivered to the Company or its
designee a stock power, endorsed in blank, relating to the stock covered
by such Grant. If and when such restrictions so lapse, any
stock certificates shall be delivered by the Company to the Grantee or his
or her designee as provided in Section
9(d).
|
d. Restrictions
and Conditions. Unless otherwise provided by the Committee in an
Agreement, the Shares of Restricted Stock awarded pursuant to the Plan shall be
subject to the following restrictions and conditions:
|
(i)
|
Subject
to the provisions of the Plan and the applicable Agreement, during a
period commencing with the date of such Grant and ending on the date the
period of forfeiture with respect to such Shares lapses, the Grantee shall
not be permitted voluntarily or involuntarily to sell, transfer, pledge,
anticipate, alienate, encumber or assign Shares of Restricted Stock
awarded under the Plan (or have such Shares attached or
garnished). Subject to the provisions of the applicable
Agreement and clauses (iii) and (iv) below, the period of forfeiture with
respect to Shares granted hereunder shall lapse as provided in the
applicable Agreement. Notwithstanding the foregoing, unless
otherwise expressly provided by the Committee, the period of forfeiture
with respect to such Shares shall only lapse as to whole
Shares.
|
- 11
- -
|
(ii)
|
Except
as provided in the foregoing clause (i), below in this clause (ii), or in
Section 15, or as otherwise provided in the applicable Agreement, the
Grantee shall have, in respect of the Shares of Restricted Stock, all of
the rights of a stockholder of the Company, including the right to vote
the Shares; provided, however, that cash dividends on such Shares shall,
unless otherwise provided by the Committee in the applicable Agreement, be
held by the Company (unsegregated as a part of its general assets) until
the period of forfeiture lapses (and forfeited if the underlying Shares
are forfeited), and paid over to the Grantee as soon as practicable after
such period lapses (if not forfeited). Certificates for Shares
(not subject to restrictions hereunder) shall be delivered to the Grantee
or his or her designee promptly after, and only after, the period of
forfeiture shall lapse without forfeiture in respect of such Shares of
Restricted Stock.
|
|
(iii)
|
Termination
of Service, Except by Death, Retirement or Disability. Unless
otherwise provided in the applicable Agreement, and subject to clause (iv)
below, if the Grantee has a Termination of Service for Cause or by the
Grantee for any reason other than his or her death, Retirement or
Disability, during the applicable period of forfeiture, then (A) all
Restricted Stock still subject to restriction shall thereupon, and with no
further action, be forfeited by the Grantee, and (B) the Company shall pay
to the Grantee as soon as practicable (and in no event more than 30 days)
after such termination an amount equal to the lesser of (x) the amount
paid by the Grantee, if any, for such forfeited Restricted Stock as
contemplated by Section 9(b), and (y) the Fair Market Value on the date of
termination of the forfeited Restricted
Stock.
|
|
(iv)
|
Death,
Disability or Retirement of Grantee. Unless otherwise provided
in the applicable Agreement, in the event the Grantee has a Termination of
Service on account of his or her death, Disability or Retirement, or the
Grantee has a Termination of Service by the Participating Company for any
reason other than Cause, during the applicable period of forfeiture, then
restrictions under the Plan will immediately lapse on all Restricted Stock
granted to the applicable Grantee.
|
10. PROVISIONS
APPLICABLE TO PHANTOM SHARES.
a. Grant
of Phantom Shares. Subject to the other terms of the Plan, the
Committee shall, in its discretion as reflected by the terms of the applicable
Agreement: (i) authorize the granting of Phantom Shares to Eligible Persons and
(ii) determine or impose other conditions to the grant of Phantom Shares under
the Plan as it may deem appropriate.
b. Term. The
Committee may provide in an Agreement that any particular Phantom Share shall
expire at the end of a specified term.
c. Vesting.
|
(i)
|
Subject
to the provisions of the applicable Agreement and Section 10(c)(ii),
Phantom Shares shall vest as provided in the applicable
Agreement.
|
|
(ii)
|
Unless
otherwise determined by the Committee in an applicable Agreement, the
Phantom Shares granted pursuant to the Plan shall be subject to the
following vesting conditions:
|
|
(1)
|
Termination
of Service for Cause. Unless otherwise provided in the
applicable Agreement and subject to clause (2) below, if the Grantee has a
Termination of Service for Cause, all of the Grantee’s Phantom Shares
(whether or not such Phantom Shares are otherwise vested) shall thereupon,
and with no further action, be forfeited by the Grantee and cease to be
outstanding, and no payments shall be made with respect to such forfeited
Phantom Shares.
|
- 12
- -
|
(2)
|
Termination
of Service for Death, Disability or Retirement of Grantee or by the
Participating Company for Any Reason Other than Cause. Unless
otherwise provided in the applicable Agreement, in the event the Grantee
has a Termination of Service on account of his or her death, Disability or
Retirement, or the Grantee has a Termination of Service by the
Participating Company for any reason other than Cause, all outstanding
Phantom Shares granted to such Grantee shall become immediately
vested.
|
|
(3)
|
Except
as contemplated above, in the event that a Grantee has a Termination of
Service, any and all of the Grantee's Phantom Shares which have not vested
prior to or as of such termination shall thereupon, and with no further
action, be forfeited and cease to be outstanding, and the Grantee’s vested
Phantom Shares shall be settled as set forth in Section
10(d).
|
d. Settlement
of Phantom Shares.
|
(i)
|
Except
as otherwise provided by the Committee, each vested and outstanding
Phantom Share shall be settled by the transfer to the Grantee of one
Share; provided, however, that, the Committee at the time of grant (or, in
the appropriate case, as determined by the Committee, thereafter) may
provide that a Phantom Share may be settled (A) in cash at the applicable
Phantom Share Value, (B) in cash or by transfer of Shares as elected by
the Grantee in accordance with procedures established by the Committee or
(C) in cash or by transfer of Shares as elected by the
Company.
|
|
(ii)
|
Each
Phantom Share shall be settled with a single-sum payment by the Company;
provided, however, that, with respect to Phantom Shares of a Grantee which
have a common Settlement Date (as defined below), the Committee may permit
the Grantee to elect in accordance with procedures established by the
Committee (taking into account, without limitation, Section 409A of the
Code, as the Committee may deem appropriate) to receive installment
payments over a period not to exceed 10 years. If the Grantee’s
Phantom Shares are paid out in installment payments, such installment
payments shall be treated as a series of separate payments for purposes of
Section 409A of the Code.
|
|
(iii)
|
(1)
|
Unless
otherwise provided in an applicable Agreement, the settlement date with
respect to a Grantee is the first day of the month to follow the Grantee's
Termination of Service ("Settlement Date"); provided, however, that a
Grantee may elect, in accordance with procedures to be adopted by the
Committee, that such Settlement Date will be deferred as elected by the
Grantee to a time permitted by the Committee under procedures to be
established by the Committee. Notwithstanding the prior
sentence, all initial elections to defer the Settlement Date shall be made
in accordance with the requirements of Section 409A of the
Code. In addition, unless otherwise determined by the
Committee, any subsequent elections under this Section 10(d)(iii)(1) must,
except as may otherwise be permitted under the rules applicable under
Section 409A of the Code, (A) not be effective for at least one year after
they are made, or, in the case of payments to commence at a specific time,
be made at least one year before the first scheduled payment and (B) defer
the commencement of distributions (and each affected distribution) for at
least five years.
|
- 13
- -
(2)
|
Notwithstanding
Section 10(d)(iii)(1), the Committee may provide thatdistributions of
Phantom Shares can be elected at any time in those cases inwhich the
Phantom Share Value is determined by reference to Fair Market Valueto the
extent in excess of a base value, rather than by reference to unreduced
Fair Market Value.
|
(3)
|
Notwithstanding
the foregoing, the Settlement Date, if not earlier pursuant to thisSection
10(d)(iii), is the date of the Grantee's
death.
|
|
(iv)
|
Notwithstanding
any other provision of the Plan, a Grantee may receive any amounts to be
paid in installments as provided in Section 10(d)(ii) or deferred by the
Grantee as provided in Section 10(d)(iii) in the event of an
"Unforeseeable Emergency." For these purposes, an
"Unforeseeable Emergency," as determined by the Committee in its sole
discretion, is a severe financial hardship to the Grantee resulting from a
sudden and unexpected illness or accident of the Grantee or "dependent,"
as defined in Section 152(a) of the Code, of the Grantee, loss of the
Grantee's property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Grantee. The circumstances that will constitute
an Unforeseeable Emergency will depend upon the facts of each case, but,
in any case, payment may not be made to the extent that such hardship is
or may be relieved:
|
|
(1)
|
through
reimbursement or compensation by insurance or
otherwise;
|
|
(2)
|
by
liquidation of the Grantee's assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship;
or
|
|
(3)
|
by
future cessation of the making of additional deferrals under Section
10(d)(ii) and (iii).
|
Without
limitation, the need to send a Grantee's child to college or the desire to
purchase a home shall not constitute an Unforeseeable
Emergency. Distributions of amounts because of an Unforeseeable
Emergency shall be permitted to the extent reasonably needed to satisfy the
emergency need.
e. Other
Phantom Share Provisions.
|
(i)
|
Except
as permitted by the Committee, rights to payments with respect to Phantom
Shares granted under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, garnishment, levy, execution, or other legal or equitable
process, either voluntary or involuntary; and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, attach or garnish, or
levy or execute on any right to payments or other benefits payable
hereunder, shall be void.
|
|
(ii)
|
A
Grantee may designate in writing, on forms to be prescribed by the
Committee, a beneficiary or beneficiaries to receive any payments payable
after his or her death and may amend or revoke such designation at any
time. If no beneficiary designation is in effect at the time of
a Grantee's death, payments hereunder shall be made to the Grantee's
estate. If a Grantee with a vested Phantom Share dies, such
Phantom Share shall be settled and the Phantom Share Value in respect of
such Phantom Shares paid, and any payments deferred pursuant to an
election under Section 10(d)(iii) shall be accelerated and paid, as soon
as practicable (but no later than 60 days) after the date of death to such
Grantee's beneficiary or estate, as
applicable.
|
- 14
- -
|
(iii)
|
The
Committee may establish a program (taking into account, without
limitation, the application of Section 409A of the Code, as the Committee
may deem appropriate) under which distributions with respect to Phantom
Shares may be deferred for periods in addition to those otherwise
contemplated by the foregoing provisions of this Section
10. Such program may include, without limitation, provisions
for the crediting of earnings and losses on unpaid amounts and, if
permitted by the Committee, provisions under which Grantees may select
from among hypothetical investment alternatives for such deferred amounts
in accordance with procedures established by the
Committee.
|
|
(iv)
|
Notwithstanding
any other provision of this Section 10, any fractional Phantom Share will
be paid out in cash at the Phantom Share Value as of the Settlement
Date.
|
|
(v)
|
No
Phantom Share shall give any Grantee any rights with respect to Shares or
any ownership interest in the Company. Except as may be
provided in accordance with Section 11, no provision of the Plan shall be
interpreted to confer upon any Grantee of a Phantom Share any voting,
dividend or derivative or other similar rights with respect to any Phantom
Share.
|
f. Claims
Procedures.
|
(i)
|
The
Grantee, or his or her beneficiary hereunder or authorized representative,
may file a claim for payments with respect to Phantom Shares under the
Plan by written communication to the Committee or its
designee. A claim is not considered filed until such
communication is actually received. Within 90 days (or, if
special circumstances require an extension of time for processing, 180
days, in which case notice of such special circumstances should be
provided within the initial 90-day period) after the filing of the claim,
the Committee will either:
|
|
(1)
|
approve
the claim and take appropriate steps for satisfaction of the claim;
or
|
|
(2)
|
if
the claim is wholly or partially denied, advise the claimant of such
denial by furnishing to him or her a written notice of such denial setting
forth (A) the specific reason or reasons for the denial; (B) specific
reference to pertinent provisions of the Plan on which the denial is based
and, if the denial is based in whole or in part on any rule of
construction or interpretation adopted by the Committee, a reference to
such rule, a copy of which shall be provided to the claimant; (C) a
description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of the reasons why such
material or information is necessary; and (D) a reference to this Section
10(f) as the provision setting forth the claims procedure under the
Plan.
|
|
(ii)
|
The
claimant may request a review of any denial of his or her claim by written
application to the Committee within 60 days after receipt of the notice of
denial of such claim. Within 60 days (or, if special
circumstances require an extension of time for processing, 120 days, in
which case notice of such special circumstances should be provided within
the initial 60-day period) after receipt of written application for
review, the Committee will provide the claimant with its decision in
writing, including, if the claimant's claim is not approved, specific
reasons for the decision and specific references to the Plan provisions on
which the decision is based.
|
- 15
- -
11.
PROVISIONS APPLICABLE TO DIVIDEND EQUIVALENT RIGHTS.
a. Grant
of DERs. Subject to the other terms of the Plan (including, without
limitation, Section 7(a)), the Committee shall, in its discretion as reflected
by the terms of the Agreements, authorize the granting of DERs to Eligible
Persons based on the dividends declared on Common Stock, to be credited as of
the dividend payment dates, during the period between the date a Grant is
issued, and the date such Grant is exercised, vests or expires, as determined by
the Committee. Such DERs shall be converted to cash or additional
Shares by such formula and at such time and subject to such limitation as may be
determined by the Committee. With respect to DERs granted with
respect to Options intended to be qualified performance-based compensation for
purposes of Section 162(m) of the Code, such DERs shall be payable regardless of
whether such Option is exercised. If a DER is granted in respect of
another Grant hereunder, then, unless otherwise stated in the Agreement, or, in
the appropriate case, as determined by the Committee, in no event shall the DER
be in effect for a period beyond the time during which the applicable related
portion of the underlying Grant has been exercised or otherwise settled, or has
expired, been forfeited or otherwise lapsed, as applicable.
b. Certain
Terms.
|
(i)
|
The
term of a DER shall be set by the Committee in its
discretion.
|
|
(ii)
|
Payment
of the amount determined in accordance with Section 11(a) shall be in
cash, in Common Stock or a combination of the both, as determined by the
Committee at the time of grant.
|
c. Other
Types of DERs. The Committee may establish a program under which DERs
of a type whether or not described in the foregoing provisions of this Section
11 may be granted to Eligible Persons. For example, without
limitation, the Committee may grant a DER in respect of each Share subject to an
Option or with respect to a Phantom Share, which right would consist of the
right (subject to Section 11(d)) to receive a cash payment in an amount equal to
the dividend distributions paid on a Share from time to time.
d. Deferral.
|
(i)
|
The
Committee may (taking into account, without limitation, the possible
application of Section 409A of the Code, as the Committee may deem
appropriate) establish a program under which Grantees (i) will have
Phantom Shares credited, subject to the terms of Sections 10(d) and 10(e)
as though directly applicable with respect thereto, upon the granting of
DERs, or (ii) will have payments with respect to DERs
deferred.
|
|
(ii)
|
The
Committee may establish a program under which distributions with respect
to DERs may be deferred. Such program may include, without
limitation, provisions for the crediting of earnings and losses on unpaid
amounts, and, if permitted by the Committee, provisions under which
Grantees may select from among hypothetical investment alternatives for
such deferred amounts in accordance with procedures established by the
Committee.
|
- 16
- -
12. OTHER
EQUITY-BASED AWARDS. The Board shall have the right to issue other
Grants based upon the Common Stock having such terms and conditions as the Board
may determine, including, without limitation, the grant of Shares based upon
certain conditions, and the grant of securities convertible into Common
Stock.
13. PERFORMANCE
GOALS. The Committee, in its discretion, shall in the case of Grants
(including, in particular, Grants other than Options) intended to qualify for an
exception from the limitation imposed by Section 162(m) of the Code
("Performance-Based Grants") (i) establish one or more performance goals
("Performance Goals") as a precondition to the issue of Grants, and (ii)
provide, in connection with the establishment of the Performance Goals, for
predetermined Grants to those Grantees (who continue to meet all applicable
eligibility requirements) with respect to whom the applicable Performance Goals
are satisfied. The Performance Goals shall be based upon the criteria
set forth in Exhibit
B hereto which is hereby incorporated herein by reference as though set
forth in full. The Performance Goals shall be established in a timely
fashion such that they are considered preestablished for purposes of the rules
governing performance-based compensation under Section 162(m) of the Code. Prior
to the award of Restricted Stock hereunder, the Committee shall have certified
that any applicable Performance Goals, and other material terms of the Grant,
have been satisfied. Performance Goals which do not satisfy the
foregoing provisions of this Section 13 may be established by the Committee with
respect to Grants not intended to qualify for an exception from the limitations
imposed by Section 162(m) of the Code.
14. TERM
OF PLAN. Grants may be granted pursuant to the Plan until the
expiration of 10 years from the effective date of the Plan.
15. RECAPITALIZATION
AND CHANGES OF CONTROL.
a. Subject
to any required action by stockholders and to the specific provisions of Section
16, if (i) the Company shall at any time be involved in a merger, consolidation,
dissolution, liquidation, reorganization, exchange of shares, sale of all or
substantially all of the assets or stock of the Company or a transaction similar
thereto, (ii) any stock dividend, stock split, reverse stock split, stock
combination, reclassification, recapitalization or other similar change in the
capital structure of the Company, or any distribution to holders of Common Stock
other than cash dividends, shall occur or (iii) any other event shall occur
which in the judgment of the Committee necessitates action by way of adjusting
the terms of the outstanding Grants, then:
|
(1)
|
the
maximum aggregate number of Shares which shall be made subject to Options
and DERs under the Plan, the maximum aggregate number and kind of Shares
of Restricted Stock that shall be granted under the Plan, the maximum
aggregate number of Phantom Shares and other Grants which may be granted
under the Plan shall be appropriately adjusted by the Committee in its
discretion; and
|
|
(2)
|
the
Committee shall take any such action as in its discretion shall be
necessary to maintain each Grantees' rights hereunder (including under
their applicable Agreements) so that they are, in their respective
Options, Phantom Shares and DERs (and, as appropriate, other Grants under
Section 12), substantially proportionate to the rights existing in such
Options, Phantom Shares and DERs prior to such event (and other Grants
under Section 12), including, without limitation, adjustments in (A) the
number of Options, Phantom Shares and DERs (and other Grants under Section
12) granted, (B) the number and kind of shares or other property to be
distributed in respect of Options, Phantom Shares and DERs (and other
Grants under Section 12, as applicable, (C) the Exercise Price, Purchase
Price and Phantom Share Value, and (D) performance-based criteria
established in connection with Grants (to the extent consistent with
Section 162(m) of the Code, as applicable); provided that, in the
discretion of the Committee, the foregoing clause (D) may also be applied
in the case of any event relating to a Subsidiary if the event would have
been covered under this Section 15(a) had the event related to the
Company.
|
- 17
- -
To the
extent that such action shall include an increase or decrease in the number of
Shares subject to all outstanding Grants, the number of Shares available under
Section 6 above shall be increased or decreased, as the case may be,
proportionately, as may be determined by the Committee in its
discretion.
b. Any
Shares or other securities distributed to a Grantee with respect to Restricted
Stock or otherwise issued in substitution of Restricted Stock pursuant to this
Section 15 shall be subject to the restrictions and requirements imposed by
Section 9, including depositing the certificates therefor with the Company
together with a stock power and bearing a legend as provided in Section
9(c)(i).
c. If
the Company shall be consolidated or merged with another corporation or other
entity, each Grantee who has received Restricted Stock that is then subject to
restrictions imposed by Section 9(d) may be required to deposit with the
successor corporation the certificates for the stock or securities or the other
property that the Grantee is entitled to receive by reason of ownership of
Restricted Stock in a manner consistent with Section 9(c)(ii), and such stock,
securities or other property shall become subject to the restrictions and
requirements imposed by Section 9(d), and the certificates therefor or other
evidence thereof shall bear a legend similar in form and substance to the legend
set forth in Section 9(c)(i).
d. The
judgment of the Committee with respect to any matter referred to in this Section
15 shall be conclusive and binding upon each Grantee without the need for any
amendment to the Plan.
e. Subject
to any required action by stockholders, if the Company is the surviving
corporation in any merger or consolidation, the rights under any outstanding
Grant shall pertain and apply to the securities to which a holder of the number
of Shares subject to the Grant would have been entitled. Subject to
the terms of any Agreement, in the event of a merger or consolidation in which
the Company is not the surviving corporation, the date of exercisability of each
outstanding Option and settling of each Phantom Share or, as applicable, other
Grant under Section 12, shall be accelerated to a date prior to such merger or
consolidation, unless the agreement of merger or consolidation provides for the
assumption of the Grant by the successor to the Company.
f. To
the extent that the foregoing adjustment related to securities of the Company,
such adjustments shall be made by the Committee, whose determination shall be
conclusive and binding on all persons.
g. Except
as expressly provided in this Section 15, a Grantee shall have no rights by
reason of subdivision or consolidation of shares of stock of any class, the
payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class or by reason of any dissolution, liquidation,
merger or consolidation or spin-off of assets or stock of another corporation,
and any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of Shares
subject to a Grant or the Exercise Price of Shares subject to an
Option.
- 18
- -
h. Grants
made pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business assets.
i. Upon
the occurrence of a Change of Control:
|
(i)
|
The
Committee as constituted immediately before the Change of Control may make
such adjustments as it, in its discretion, determines are necessary or
appropriate in light of the Change of Control (including, without
limitation, the substitution of stock other than stock of the Company as
the stock optioned hereunder, and the acceleration of the exercisability
of the Options and settling of each Phantom Share or, as applicable, other
Grant under Section 12), provided that the Committee determines that such
adjustments do not have a substantial adverse economic impact on the
Grantee as determined at the time of the
adjustments.
|
|
(ii)
|
Except
as otherwise provided in an applicable Agreement, all restrictions and
conditions on each DER shall automatically lapse and all Grants under the
Plan shall be deemed fully vested.
|
|
(iii)
|
Notwithstanding
the provisions of Section 10 (taking into account, without limitation, the
application of Section 409A of the Code, as the Committee may deem
appropriate), the Settlement Date for Phantom Shares shall be the date of
such Change of Control and all amounts due with respect to Phantom Shares
to a Grantee hereunder shall be paid as soon as practicable (but in no
event more than 30 days) after such Change of Control, unless such Grantee
elects otherwise in accordance with procedures established by the
Committee.
|
j. "Change
of 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 Exchange
Act(other than the Company, any of its affiliates or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its affiliates and, with
respect to any particular Eligible Employee, other than such Eligible
Employee) together with all "affiliates" and "associates" (as such terms
are defined in Rule 12b-2 under the Exchange Act) of such person, shall
become the "beneficial owner" (as such term is defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of either (A) the combined voting power of the
Company's then outstanding securities having the right to vote in an
election of the Board ("voting securities") or (B) the then outstanding
Shares (in either such case other than as a result of an acquisition of
securities directly from the Company);
or
|
|
(ii)
|
persons
who, as of the effective date of the Plan, constitute the Board (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,
provided that any person becoming a member of the Board subsequent to the
effective date whose election or nomination for election was approved
and/or ratified by a vote of at least a majority of the Incumbent
Directors shall, for purposes of the Plan, be considered an Incumbent
Director; or
|
- 19
- -
|
(iii)
|
there
shall occur (A) any consolidation or merger of the Company or any
Subsidiary where the stockholders of the Company, 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
Exchange 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 the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company.
|
Notwithstanding
the foregoing, a "Change of 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 the Company 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 of Control" shall be deemed to have occurred for purposes of this
subsection (j).
16. EFFECT
OF CERTAIN TRANSACTIONS. In the case of (i) the dissolution or
liquidation of the Company, (ii) a merger, consolidation, reorganization or
other business combination in which the Company is acquired by another entity or
in which the Company is not the surviving entity, or (iii) 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 the Company, the Plan and the Grants issued hereunder shall
terminate upon the effectiveness of any such transaction or event, unless
provision is made in connection with such transaction for the assumption of
Grants theretofore granted, or the substitution for such Grants of new Grants,
by the successor entity or parent thereof, with appropriate adjustment as to the
number and kind of shares and the per share exercise prices, as provided in
Section 15. In the event of such termination, all outstanding Options
and Grants shall be exercisable in full for at least fifteen days prior to the
date of such termination whether or not otherwise exercisable during such
period.
17.
SECURITIES LAW REQUIREMENTS.
a. Legality
of Issuance. The issuance of any Shares pursuant to Grants under the
Plan and the issuance of any Grant shall be contingent upon the
following:
|
(i)
|
the
obligation of the Company to sell Shares with respect to Grants issued
under the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws,
and the obtaining of all such approvals by governmental agencies as may be
deemed necessary or appropriate by the
Committee;
|
|
(ii)
|
the
Committee may make such changes to the Plan as may be necessary or
appropriate to comply with the rules and regulations of any government
authority or to obtain tax benefits applicable to stock options;
and
|
- 20
- -
|
(iii)
|
each
grant of Options, Restricted Stock, Phantom Shares (or issuance of Shares
in respect thereof) or DERs (or issuance of Shares in respect thereof), or
other Grant under Section 12 (or issuance of Shares in respect thereof),
is subject to the requirement that, if at any time the Committee
determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as
a condition of, or in connection with, the issuance of Options, Shares of
Restricted Stock, Phantom Shares, DERs, other Grants or other Shares, no
payment shall be made, or Phantom Shares or Shares issued or grant of
Restricted Stock or other Grant made, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or
obtained free of any conditions in a manner acceptable to the
Committee.
|
b. Restrictions
on Transfer. Regardless of whether the offering and sale of Shares
under the Plan has been registered under the Act or has been registered or
qualified under the securities laws of any state, the Company may impose
restrictions on the sale, pledge or other transfer of such Shares (including the
placement of appropriate legends on stock certificates) if, in the judgment of
the Company and its counsel, such restrictions are necessary or desirable in
order to achieve compliance with the provisions of the Act, the securities laws
of any state or any other law. In the event that the sale of Shares
under the Plan is not registered under the Act but an exemption is available
which requires an investment representation or other representation, each
Grantee shall be required to represent that such Shares are being acquired for
investment, and not with a view to the sale or distribution thereof, and to make
such other representations as are deemed necessary or appropriate by the Company
and its counsel. Any determination by the Company and its counsel in
connection with any of the matters set forth in this Section 17 shall be
conclusive and binding on all persons. Without limiting the
generality of Section 6, stock certificates evidencing Shares acquired under the
Plan pursuant to an unregistered transaction shall bear a restrictive legend,
substantially in the following form, and such other restrictive legends as are
required or deemed advisable under the provisions of any applicable
law:
"THE SALE
OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"). ANY TRANSFER OF SUCH SECURITIES
WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER SUCH REGISTRATION IS
UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT."
c. Registration
or Qualification of Securities. The Company may, but shall not be
obligated to, register or qualify the issuance of Grants and/or the sale of
Shares under the Act or any other applicable law. The Company shall
not be obligated to take any affirmative action in order to cause the issuance
of Grants or the sale of Shares under the Plan to comply with any
law.
d. Exchange
of Certificates. If, in the opinion of the Company and its counsel,
any legend placed on a stock certificate representing Shares sold under the Plan
is no longer required, the holder of such certificate shall be entitled to
exchange such certificate for a certificate representing the same number of
Shares but lacking such legend.
e. Certain
Loans. Notwithstanding any other provision of the Plan, the Company
shall not be required to take or permit any action under the Plan or any
Agreement which, in the good-faith determination of the Company, would result in
a material risk of a violation by the Company of Section 13(k) of the Exchange
Act.
18. AMENDMENT
OF THE PLAN. The Board may from time to time, with respect to any
Shares at the time not subject to Grants, suspend or discontinue the Plan or
revise or amend it in any respect whatsoever. The Board may amend the
Plan as it shall deem advisable, except that no amendment may adversely affect a
Grantee with respect to Grants previously granted unless such amendments are in
connection with compliance with applicable laws; provided, however, that the
Board may not make any amendment in the Plan that would, if such amendment were
not approved by the holders of the Common Stock, cause the Plan to fail to
comply with any requirement of applicable law or regulation, or of any
applicable exchange or similar rule, unless and until the approval of the
holders of such Common Stock is obtained.
- 21
- -
19. APPLICATION
OF FUNDS. The proceeds received by the Company from the sale of
Common Stock pursuant to the exercise of an Option, the sale of Restricted Stock
or in connection with other Grants under the Plan will be used for general
corporate purposes.
20. TAX
WITHHOLDING. Each Grantee shall, no later than the date as of which
the value of any Grant first becomes includable in the gross income of the
Grantee for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Company regarding payment of any federal, state
or local taxes of any kind that are required by law to be withheld with respect
to such income. A Grantee may, if approved (or pre-approved) by the
Committee in its discretion, elect to have such tax withholding satisfied, in
whole or in part, by (i) authorizing the Company to withhold a number of Shares
to be issued pursuant to a Grant equal to the Fair Market Value as of the date
withholding is effected that would satisfy the withholding amount due, (ii)
transferring to the Company Shares owned by the Grantee with a Fair Market Value
equal to the amount of the required withholding tax, or (iii) in the case of a
Grantee who is an Employee of the Company at the time such withholding is
effected, by withholding from the Grantee's cash
compensation. Notwithstanding anything contained in the Plan to the
contrary, the Grantee's satisfaction of any tax-withholding requirements imposed
by the Committee shall be a condition precedent to the Company's obligation as
may otherwise by provided hereunder to provide Shares to the Grantee, and the
failure of the Grantee to satisfy such requirements with respect to a Grant
shall cause such Grant to be forfeited.
21. NOTICES. All
notices under the Plan shall be in writing, and if to the Company, shall be
delivered to the Board or mailed to its principal office, addressed to the
attention of the Board; and if to the Grantee, shall be delivered personally or
mailed to the Grantee at the address appearing in the records of the
Participating Company. Such addresses may be changed at any time by
written notice to the other party given in accordance with this Section
21.
22. RIGHTS
TO EMPLOYMENT OR OTHER SERVICE. Nothing in the Plan or in any Grant
issued pursuant to the Plan shall confer on any individual any right to continue
in the employ or other service of the Participating Company (if applicable) or
interfere in any way with the right of the Participating Company and its
stockholders to terminate the individual's employment or other service at any
time.
23. EXCULPATION
AND INDEMNIFICATION. To the maximum extent permitted by law, the
Company shall indemnify and hold harmless the members of the Board and the
members of the Committee from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act or omission to act in
connection with the performance of such person's duties, responsibilities and
obligations under the Plan, other than such liabilities, costs and expenses as
may result from the gross negligence, bad faith, willful misconduct or criminal
acts of such persons.
- 22
- -
24. COMPLIANCE
WITH SECTION 409A OF THE CODE.
|
(i)
|
Any
Agreement issued under the Plan that is subject to Section 409A of the
Code shall include such additional terms and conditions as may be required
to satisfy the requirements of Section 409A of the
Code.
|
|
(ii)
|
With
respect to any Grant issued under the Plan that is subject to Section 409A
of the Code, and with respect to which a payment or distribution is to be
made upon a Termination of Service, if the Grantee is determined by the
Company to be a “specified employee” within the meaning of Section
409A(a)(2)(B)(i) of the Code and any of the Company’s stock is publicly
traded on an established securities market or otherwise, such payment or
distribution may not be made before the date which is six months after the
date of Termination of Service (to the extent required under Section 409A
of the Code). Any payments or distributions delayed in
accordance with the prior sentence shall be paid to the Grantee on the
first day of the seventh month following the Grantee’s Termination of
Service.
|
|
(iii)
|
Notwithstanding
any other provision of the Plan, the Board and the Committee shall
administer the Plan, and exercise authority and discretion under the Plan,
to satisfy the requirements of Section 409A of the Code or any exemption
thereto.
|
25. NO
FUND CREATED. Any and all payments hereunder to any Grantee
under the Plan shall be made from the general funds of the Company (or, if
applicable, a Participating Company), no special or separate fund shall be
established or other segregation of assets made to assure such payments, and the
Phantom Shares (including for purposes of this Section 25 any accounts
established to facilitate the implementation of Section 10(d)(iii)) and any
other similar devices issued hereunder to account for Plan obligations do not
constitute Common Stock and shall not be treated as (or as giving rise to)
property or as a trust fund of any kind; provided, however, that the Company (or
a Participating Company) may establish a mere bookkeeping reserve to meet its
obligations hereunder or a trust or other funding vehicle that would not cause
the Plan to be deemed to be funded for tax purposes or for purposes of Title I
of the Employee Retirement Income Security Act of 1974, as
amended. The obligations of the Company (or, if applicable, a
Participating Company) under the Plan are unsecured and constitute a mere
promise by the Company (or, if applicable, a Participating Company) to make
benefit payments in the future and, to the extent that any person acquires a
right to receive payments under the Plan from the Company (or, if applicable, a
Participating Company), such right shall be no greater than the right of a
general unsecured creditor of the Company (or, if applicable, a Participating
Company). Without limiting the foregoing, Phantom Shares and any
other similar devices issued hereunder to account for Plan obligations are
solely a device for the measurement and determination of the amounts to be paid
to a Grantee under the Plan, and each Grantee's right in the Phantom Shares and
any such other devices is limited to the right to receive payment, if any, as
may herein be provided.
26. NO
FIDUCIARY RELATIONSHIP. Nothing contained in the Plan (including
without limitation Section 10(e)(iii)), and no action taken pursuant to the
provisions of the Plan, shall create or shall be construed to create a trust of
any kind, or a fiduciary relationship between the Company, the Participating
Companies, or their officers or the Committee, on the one hand, and the Grantee,
the Company, the Participating Companies or any other person or entity, on the
other.
27. CAPTIONS. The
use of captions in the Plan is for convenience. The captions are not
intended to provide substantive rights.
28.
GOVERNING LAW. THE PLAN SHALL BE GOVERNED BY THE LAWS OF MARYLAND,
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.
- 23
- -
29. EXECUTION. The
Company has caused the Plan to be executed in the name and on behalf of the
Company by an officer of the Company thereunto duly authorized as of this tenth
day of May, 2010.
MFA
FINANCIAL, INC.,
|
|||
a
Maryland corporation
|
|||
By:
|
/s/Ronald
A. Freydberg
|
||
Name:
Ronald A. Freydberg
|
|||
Title:
Chief Investment and Administrative
Officer
|
- 24
- -
EXHIBIT
A
INITIAL
AWARDS TO COMPENSATION COMMITTEE MEMBERS
In
accordance with Section 7(a) herein, a member of the Committee shall be eligible
to receive the following Non-qualified Stock Option and DERs upon the date such
person is initially appointed to the Committee:
1. Non-qualified
Stock Option to purchase 5,000 shares of Common Stock
2. 1,250
DERs
EXHIBIT
B
PERFORMANCE
CRITERIA
Performance-Based
Grants intended to qualify as "performance based" compensation under Section
162(m) of the Code, may be payable upon the attainment of objective performance
goals that are established by the Committee and relate to one or more
Performance Criteria, in each case on specified date or over any period, up to
10 years, as determined by the Committee. Performance Criteria may be
based on the achievement of the specified levels of performance under one or
more of the measures set out below relative to the performance of one or more
other corporations or indices.
"Performance
Criteria" means the following business criteria (or any combination thereof)
with respect to one or more of the Company, any Participating Company or any
division or operating unit thereof:
|
i.)
|
pre-tax
income,
|
|
ii.)
|
after-tax
income,
|
|
iii.)
|
net
income (meaning net income as reflected in the Company's financial reports
for the applicable period, on an aggregate, diluted and/or per share
basis),
|
|
iv.)
|
operating
income,
|
|
v.)
|
cash
flow,
|
|
vi.)
|
earnings
per share,
|
|
vii.)
|
return
on equity,
|
|
viii.)
|
return
on invested capital or assets,
|
|
ix.)
|
cash
and/or funds available for
distribution,
|
|
x.)
|
appreciation
in the fair market value of the Common
Stock,
|
|
xi.)
|
return
on investment,
|
|
xii.)
|
total
return to stockholders (meaning the aggregate Common Stock price
appreciation and dividends paid (assuming full reinvestment of dividends)
during the applicable period),
|
|
xiii.)
|
net
earnings growth,
|
|
xiv.)
|
stock
appreciation (meaning an increase in the price or value of the Common
Stock after the date of grant of an award and during the applicable
period),
|
|
xv.)
|
related
return ratios,
|
|
xvi.)
|
increase
in revenues,
|
|
xvii.)
|
the
Company's published ranking against its peer group of real estate
investment trusts based on total stockholder
return,
|
|
xviii.)
|
net
earnings,
|
|
xix.)
|
changes
(or the absence of changes) in the per share or aggregate market price of
the Company's Common Stock,
|
|
xx.)
|
number
of securities sold,
|
|
xxi.)
|
earnings
before any one or more of the following items: interest, taxes,
depreciation or amortization for the applicable period, as reflected in
the Company's financial reports for the applicable period,
and
|
xxii.)
|
total
revenue growth (meaning the increase in total revenues after the date of
grant of an award and during the applicable period, as reflected in the
Company's financial reports for the applicable
period).
|
Except as
otherwise expressly provided, all financial terms are used as defined under
Generally Accepted Accounting Principles (“GAAP”) and all determinations shall
be made in accordance with GAAP, as applied by the Company in the preparation of
its periodic reports to stockholders.
To the
extent permitted by Section 162(m) of the Code, unless the Committee provides
otherwise at the time of establishing the performance goals, for each fiscal
year of the Company, the Committee may provide for objectively determinable
adjustments, as determined in accordance with GAAP, to any of the Performance
Criteria described above for one or more of the items of gain, loss, profit or
expense: (A) determined to be extraordinary or unusual in nature or infrequent
in occurrence, (B) related to the disposal of a segment of a business, (C)
related to a change in accounting principle under GAAP, (D) related to
discontinued operations that do not qualify as a segment of a business under
GAAP, and (E) attributable to the business operations of any entity
acquired by the Company during the fiscal year.