Exhibit 10.2


 


CRIIMI MAE Inc.


11200
Rockville Pike, Suite 400


Rockville,
MD 20852


 


August
26, 2003


 


 


David B. Iannarone


15600 Copperfield Road


Darnestown, MD 20874


 


Dear Mr. Iannarone:


 


On behalf of CRIIMI MAE Inc. (the “Company”), we are
delighted to offer you (“you”) continued employment in the position of
Executive Vice President — Legal and Deal Management of the Company and as an
employee of CRIIMI MAE Management, Inc. (the “Employer”, together with the
Company, “CRIIMI”), in accordance with and pursuant to the following terms and
conditions of this letter (the “Agreement”):


 


	
  Provision

  	
   

  	
  Agreement

  
	
   

  	
   

  	
   

  
	
  1.  Effective
  Date

  	
   

  	
  August 26, 2003 (the “Effective Date”).

  
	
   

  	
   

  	
   

  
	
  2.  Term

  	
   

  	
  For the avoidance of doubt, the termination of your
  Employment Agreement between you and the Company, dated July 25, 2001 as
  amended did not result in your termination of employment with CRIIMI and as
  such you shall be treated as a continuing employee for purposes of all
  employee benefit plans, paid time off, option and restricted stock agreements
  with no break in service; provided, that, if you ever become
  eligible for any severance or termination pay from the Company which is based
  on your length of service, for purposes of calculating any such severance or
  termination pay, you shall be deemed to have commenced employment with CRIIMI
  on the Effective Date with no prior service credit.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The term of your employment under this Agreement
  (the “Term”) shall commence on the Effective Date and shall have no specific
  time period and you shall be an “at will” employee of CRIIMI such that CRIIMI
  or you may terminate your employment with CRIIMI at any time and for any
  reason (or no reason).  Upon your
  termination of employment with CRIIMI, if

  



 


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  requested by the Chairman or the President of the
  Company, you shall resign all other officerships and directorships you hold
  with CRIIMI and their affiliates.

  
	
   

  	
   

  	
   

  
	
  3.  Position,
  Reports and Duties

  	
   

  	
  During the Term, you shall serve as an employee of
  the Employer and as the Executive Vice President of Legal and Deal Management
  of the Company and shall report to the President and Chief Operating Officer
  of the Company (the “COO”).  You shall
  have those powers and duties normally associated with your position and such
  other powers and duties as may be prescribed by the COO and/or the Board of
  Directors of the Company (the “Board”). 
  You shall devote all of your working time, attention and energies to
  the performance of your duties for CRIIMI.

  
	
   

  	
   

  	
   

  
	
  4.  Base
  Salary

  	
   

  	
  Beginning on the Effective Date and through December
  31, 2003, you shall be paid a base salary of $39,000 (not subject to
  decrease) per month (pro rated for partial months) to be paid in accordance
  with the CRIIMI’s payroll practices. 
  Commencing on January 1, 2004, you shall be paid a base salary of
  $300,000 annually, subject to annual increase (but not decrease) by CRIIMI,
  to be paid in accordance with CRIIMI’s payroll practices (“Base Salary”).

  
	
   

  	
   

  	
   

  
	
  5.  Annual
  Bonus Target

  	
   

  	
  Commencing on January 1, 2004 and for each calendar
  year thereafter during the Term, you shall be eligible for an annual bonus
  upon the achievement of objective financial goals established by CRIIMI (the
  “Annual Bonus”) prior to the start of each calendar year during the Term.   CRIIMI shall establish the target amount
  of the Annual Bonus for which you are eligible prior to the start of each
  calendar year during the Term.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For the 2003 calendar year, you shall be paid a
  guaranteed Annual Bonus of $54,707. 
  Provided you are still employed by CRIIMI, your guaranteed minimum
  Annual Bonus for the 2004, 2005 and 2006 calendar years shall be $100,000.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Any such Annual Bonus earned during a calendar year
  shall be paid at such time as CRIIMI customarily pays annual bonuses, but you
  shall receive the entirety of the Annual Bonus to which you are entitled if
  you are employed with CRIIMI as of December 31 of such calendar year.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If your employment is terminated (i) by CRIIMI for
  any reason other than Cause (as defined below) or (ii) due to your death or
  permanent and total disability within the meaning of Section 22(e)(3)

  



 


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  of the Internal Revenue Code of 1986, as amended
  (the “Code”), you shall be paid a pro-rated portion of your guaranteed
  minimum Annual Bonus for the year of termination based on the number of days
  you worked during the relevant calendar year divided by 365 or 366 in the
  case of a leap year (e.g., if you are terminated without Cause by CRIIMI on April
  30, 2005, you shall be paid a pro-rated portion of the guaranteed minimum
  Annual Bonus that would have been paid for the year of termination equal to
  $100,000 X 120/365 or $32,876.71).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If your employment should be terminated by you for
  any reason or by CRIIMI for Cause during any calendar year, no Annual Bonus,
  including a guaranteed minimum Annual Bonus, will be paid for such calendar
  year or any future calendar year.

  
	
   

  	
   

  	
   

  
	
  6. 
  Restricted Stock

  	
   

  	
  On the Effective Date, or as soon as feasible thereafter,
  subject to the approval of the Compensation and Stock Option Committee of the
  Board of Directors of the Company (the “Committee”), you shall be granted a
  restricted stock award of common stock, $.01 par value per share, of the
  Company (“Common Stock”) in an amount of whole shares equal to 13,055 (the
  “2003 Stock Award”).  The 2003 Stock
  Award shall be granted under the terms of the Company’s stock incentive plan
  as evidenced by a restricted stock award agreement substantially in the form
  attached hereto as Exhibit A.  The
  Company shall use its best efforts to have the Committee approve the 2003
  Stock Award by September 5, 2003.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Provided you are still then employed by CRIIMI, on
  each of December 31, 2004, December 31, 2005 and December 31, 2006, subject
  to the approval of the Committee, you shall be granted a stock award in an
  amount of whole shares (fractional shares to be settled in cash) equal to
  $50,000 divided by the closing price of the Common Stock on the relevant
  December 31 (the “Additional Awards”). 
  Each such Additional Award shall vest as to 33-1/3% of the shares
  subject thereto on each of the first three anniversaries of the date of grant
  of the relevant Additional Award; provided, that, you are still
  then employed by CRIIMI on the relevant vesting dates.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If your employment is terminated at any time due to
  your death or permanent and total disability within the meaning of Section
  22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”) or
  your employment is terminated by CRIIMI without Cause, then, with respect to
  each Additional Award that has been granted to you prior to such date of
  termination of

  



 


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  employment, all restrictions on any such Additional
  Award(s) shall automatically lapse as of such date.  If your employment with CRIIMI terminates for any other reason,
  each Additional Award, or portion thereof, still subject to restriction,
  shall be forfeited.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For purposes of this Agreement, CRIIMI shall have
  “Cause” to terminate your employment upon your (i) conviction of, or plea of
  guilty or nolo contendere to, a felony; or (ii) material breach of the
  Agreement which is not cured, if curable, within ten (10) days following
  CRIIMI’s written notice to you of the event giving rise to such breach; or
  (iii) willful misconduct that is materially injurious to CRIIMI; or (iv)
  habitual drug or alcohol use which materially impairs your ability to perform
  your duties for CRIIMI; or (v) engaging in fraud, embezzlement or any other
  illegal conduct with respect to CRIIMI or any of their affiliates which is
  materially injurious to CRIIMI.

  
	
   

  	
   

  	
   

  
	
  7.  Employee
  Benefits

  	
   

  	
  During the Term, you shall be eligible to
  participate in all of CRIIMI’s benefit plans, in accordance with their terms,
  at a level equal to or greater than that made available to all other
  executives or employees of CRIIMI generally, except the Chief Executive
  Officer and President and COO.

  
	
   

  	
   

  	
   

  
	
  8. 
  Termination

  	
   

  	
  Except as provided in Sections 5 and 6 of this Agreement
  and the Letter Agreement dated August 26, 2003, between you and the Company
  (the “Letter Agreement”), upon your termination of employment with CRIIMI for
  any reason, you shall be paid any earned, but yet unpaid Base Salary through
  the date of termination of employment with CRIIMI, all accrued, but unused
  vacation pay through the date of termination of employment with CRIIMI and
  you shall not receive any other payments or benefits from CRIIMI except as
  otherwise required by (i) applicable law; (ii) the terms and conditions of
  any CRIIMI employee benefit or compensation plans (other than as noted in
  Section 2); or (iii) any other CRIIMI policy or practice (e.g., officer
  indemnification).

  
	
   

  	
   

  	
   

  
	
  9.  Governing
  Law

  	
   

  	
  This Agreement is governed by, and is to be
  construed and enforced in accordance with, the laws of the State of Maryland
  without regard to principles of conflicts of laws.

  
	
   

  	
   

  	
   

  
	
  10. 
  Miscellaneous

  	
   

  	
  (a)  Counterparts.  This Agreement may be executed in two or
  more-counterparts, each of which shall be deemed to be an

  



 


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  original but all of which together will constitute
  one and the same instrument.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)  Entire
  Agreement.  Except for the Letter
  Agreement, this Agreement sets forth the entire agreement of the parties
  hereto in respect of the subject matter contained herein and supersede all
  prior agreements, promises, covenants, arrangements, communications,
  representations or warranties, whether oral or written, by any officer,
  employee or representative of any party hereto in respect of such subject
  matter.  Except for the Letter
  Agreement, any prior agreement of the parties hereto in respect of the
  subject matter contained herein, including, without limitation, the
  Employment Agreement between the Company and you, dated as of July 25, 2001,
  as amended is hereby terminated and canceled as of the Effective Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)  Section
  Headings.  The section headings in
  this Agreement are for convenience of reference only, and they form no part
  of this Agreement and shall not affect its interpretation.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)  Withholding.  All payments hereunder shall be subject to
  any required withholding of Federal, state and local taxes pursuant to any
  applicable law or regulation.

  
	
   

  	
   

  	
   

  
	
  11.  D&O
  Insurance

  	
   

  	
  During the Term, you shall be covered by any
  directors and officers insurance the Company maintains from time to time by
  the Company for its directors and officers. 
  In addition, you shall be entitled throughout the Term in your
  capacity as an officer and/or director of the Company the benefit of the
  indemnification provisions contained in the Certificate of Incorporation
  and/or By-laws of the Company as in effect from time to time, to the extent
  not prohibited by applicable law at the time of the assertion of any
  liability against you.

  
	
   

  	
   

  	
   

  
	
  12. 
  Resignation

  	
   

  	
  Intentionally Left Blank.

  
	
   

  	
   

  	
   

  
	
  13.  Place of
  Performance

  	
   

  	
  Your principal place of employment shall transition
  from the Company’s offices in Rockville, Maryland to the Company’s offices in
  New York, New York.  At such time as
  you are requested to relocate to the New York City metropolitan area, the
  Company agrees to reimburse you for the reasonable third party out-of-pocket
  moving expenses actually incurred by you in your relocation from the State of
  Maryland to the State of New York. 
  For the avoidance of doubt, this shall include the cost of moving
  yourself and your immediate family to New York, up to two house hunting
  trips, the cost of moving your household effects to New York, brokerage
  commissions and other

  



 


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  customary fees paid or incurred on the sale of your
  existing house and other amounts agreed to among the parties, but it shall
  not include a housing allowance or reimbursement for expenses associated with
  maintaining your existing house, unless otherwise agreed by the parties.  Your failure to relocate to the New York
  City metropolitan area shall give CRIIMI “Cause” to terminate your
  employment.

  



 


If you are in agreement
with the terms and conditions of this Agreement, please execute and date both
copies and return one to me at the address set forth above.


 


	
   

  	
  Sincerely,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CRIIMI MAE Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Barry S. Blattman

  	
   

  
	
   

  	
  Barry S. Blattman

  	
   

  
	
   

  	
  Chairman/President/CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CRIIMI MAE Management, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Barry S. Blattman

  	
   

  
	
   

  	
  Barry S. Blattman

  	
   

  
	
   

  	
  Chairman/President/CEO

  	
   

  



 


 


Signatures Continue on Following Page


 


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Accepted and agreed to:


 


 


	
  /s/ David B. Iannarone

  	
   

  	
  August 26, 2003

  	
   

  
	
  David B. Iannarone

  	
  Date

  



 


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