**Exhibit 10.28**

 

# **CHANGE IN CONTROL AGREEMENT**

#  

ThisCHANGE IN CONTROL AGREEMENT (this “Agreement”) is entered into by and amongCRIIMI MAE Inc. (the “Company”), a Maryland corporation, CRIIMI MAE Management,Inc. (“CM Management”), a Maryland corporation, and Cynthia O. Azzara (the “Executive”)and shall be effective as of February 1, 2005 (the “Effective Date”).

 

1.                                       Term.  This Agreement shall be effective for theperiod commencing on the Effective Date and ending on the third anniversary ofthe Effective Date, subject to earlier termination in accordance with the termsof this Agreement (the “Term”).  The Termshall be automatically renewed for a three-year period upon the occurrence of aChange in Control (as defined below).

 

2.                                       Change in Control Benefits.

 

(a)                                  If within two years of a Change inControl the Executive’s employment with the Company and/or CM Management isterminated by the Company or CM Management (as applicable) without Cause (asdefined below) or by the Executive for Good Reason (as defined below), theCompany and CM Management shall be relieved of any further salary orcompensation payments to the Executive other than as expressly provided in thisParagraph 2.  Notwithstanding thepreceding sentence, in return for the execution and delivery by the Executiveof a general release and waiver of claims in favor of the Company and itsaffiliates, the Executive shall promptly receive from the Company and/or CMManagement a lump sum severance payment (subject to appropriate payroll and taxwithholding and deductions) equal in amount to $1,000,000.

 

(b)                                 Notwithstanding the preceding paragraph,immediately upon a Change in Control, any equity awards granted to theExecutive that have not yetbecome vested, exercisable or unrestricted (as applicable) as ofthe date of such Change in Control shall become vested, exercisable or unrestricted (as applicable, and subject to appropriatewithholding and deductions).

 

(c)                                  The foregoing severance payment andbenefits shall be in lieu of any other severance payment or severance benefit(other than the payment of accrued but unpaid salary and vacation benefitsthrough the date of termination and a pro rata portion of any accrued butunpaid minimum annual bonus for the year of such termination) under any plan,policy or practice of the Company or under any employment agreement, employmentletter, severance agreement or other understanding between the Company or CMManagement and the Executive (collectively, any “Other Agreement”).  Notwithstanding the preceding sentence,Executive will continue to be entitled to officer indemnification and shall becovered by both the Company’s directors and officers insurance and theindemnification provisions contained in the Certificate of Incorporation and/orBy-laws of the Company irrespective of whether she is employed by the Companyor CM Management at the time of the assertion of any liability againsthim.  Executive will also continue to beentitled only to such other benefits as are required by law to survive her 

 

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employment.  If it shall bedetermined that any payment or benefit provided to the Executive wouldconstitute an “excess parachute payment” within the meaning of Section 280Gof the Internal Revenue Code of 1986, as amended (the “Code”), and would besubject to the excise tax imposed by Section 4999 of the Code, then thecash payment provided to the Executive hereunder shall be reduced such that,after the deduction of appropriate payroll and tax withholding (including anysuch excise tax) from all “parachute payments” (as defined in the Code)provided to the Executive, the Executive shall receive aggregate payments andbenefits with the greatest net present value.

 

(d)                                 The termination of the Executive’semployment with the Company or CM Management shall not affect any of theobligations of the Executive, the Company or CM Management that may arise underParagraph 3 below.

 

3.                                       Nonsolicitation, Developments,Nondisparagement and Confidentiality.  Inconsideration for the benefits provided pursuant to this Agreement, theExecutive agrees:

 

(a)                                  During the Term and for a period of twoyears following the termination of the Executive’s employment with the Companyand CM Management, she will not, directly or indirectly, (i) induce or attemptto induce, any employees or agents of the Company and/or any of its affiliatesto do anything from which the Executive is restricted by reason of thisAgreement, or (ii) offer or aid others to offer employment to any employees oragents of the Company and/or its any of its affiliates.

 

(b)                                 The Executive, the Company and CMManagement agree that, during the Term and following the termination of theTerm, no party will disparage the other, including the Company’s affiliates,products, services, customers, clients, counterparties, officers, directors,employees, former employees, representatives and agents, in any way whatsoever.

 

(c)                                  All data, concepts, ideas, designs,findings, discoveries, inventions, improvements, advances, methods, formulas,plans, programs (computer or otherwise), practices, techniques, developmentsand relationships with customers and prospective customers relating in any wayto the present products, services, or business of the Company, CM Managementand their affiliates (collectively “Developments”) that the Executive firstconceived, made, invented or suggested during or as a result of her employmentby the Company or CM Management, whether acting alone or in conjunction withothers, shall be the sole and absolute property of the Company and/or CMManagement (as applicable) free of any rights of any kind on the part of theExecutive.  The Executive shall promptlymake full disclosure of all Developments to the Company.  The Executive agrees to do all acts andthings (including, among others, the execution and delivery of patent andcopyright applications and instruments of assignment) deemed by the Company tobe necessary or desirable at any time in order to effect the full assignment tothe Company of her rights, if any, to such Developments.

 

(d)                                 The Executive recognizes that, inconnection with her employment by the Company and CM Management, she may learnof, and/or it may be desirable or necessary for the Company and CM Managementto disclose to him oral or written confidential information (“ConfidentialInformation”).  The Executive understandsthat Confidential Information is 

 

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valuable and proprietary to the Company and CM Management (or to thirdparties that have entrusted the Confidential Information to the Company and CMManagement).  The Executive agrees that,except as required by her employment with the Company and CM Management or byorder of a court of competent jurisdiction, she will not at any time, directly orindirectly, use, publish, communicate, describe, disseminate, or otherwisedisclose Confidential Information to any person or entity without the expressprior written consent of the Company. The term Confidential Information shall include, but shall not belimited to:  (i) customer and clientlists, asset lists, lists of potential customers, clients or properties anddetails of agreements with customers or regarding assets; (ii) acquisition,expansion, marketing, financial and other business information and plans of theCompany and CM Management; (iii) research and development; (iv) data compiledby the Company and CM Management; (v) computer programs; (vi) sources ofsupply; (vii) Confidential Information developed by specialized consultants orcontractors for the Company and CM Management; (viii) purchasing, operating,servicing and other cost data; (ix) special customer needs, cost and pricingdata; and (x) employee information (including, but not limited to, personnel,payroll, compensation and benefit data and plans), including all suchinformation recorded in manuals, memoranda, projections, minutes, plans,drawings, designs, formula books, specifications, computer programs andrecords, whether or not legended or otherwise identified by the Company or CMManagement as Confidential Information, as well as such information that is thesubject of meetings and discussions and not recorded.  Notwithstanding anything in this subparagraph3(d), Confidential Information shall not include the contents of Executive’srolodex or her Microsoft contacts file. Confidential Information also shall not include such information that isgenerally available to the public (other than as a result of a disclosure bythe Executive) or that is disclosed to the Executive by a third party under noobligation to keep such information confidential.

 

(e)                                  Upon the termination of the Executive’semployment with the Company and CM Management or upon the Company’s requestprior to such termination, whichever is sooner, the Executive shall immediatelydeliver to the Company all plans, designs, listings, manuals, records,notebooks, and similar repositories of or containing Confidential Informationor other documents and data relating to the Company’s and CM Management’sproducts, services, or business then in the Executive’s possession or controlor available from other persons receiving such documents from the Executive,whether prepared by the Executive or others. The Executive shall not retain any copies or abstracts of any such documents.  Upon the termination of the Executive’semployment with the Company and CM Management, the Executive shall immediatelydeliver to the Company all the property of the Company and CM Management in herpossession or control including, but not limited to, computer(s) and officeequipment.

 

(f)                                    Any substantial or material breach by theExecutive of any of the obligations set forth in this Paragraph 3 shallterminate any further obligations that the Company or CM Management may haverelative to providing compensation or benefits to the Executive and shallresult in the immediate expiration and voiding of any outstanding options,rights and other awards, vested or unvested.

 

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4.                                       Definitions.

 

(a)                                  “Cause” shall exist only if, afterreasonable investigation, a majority of the Board of Directors of the Company(the “Board”), after providing the Executive (and her counsel, if she sochooses) a reasonable opportunity to be heard, finds that one or more of thefollowing conditions exists:  (i) an actor acts of personal dishonesty or misrepresentation made by the Executive andintended to result in substantial personal enrichment of the Executive at theexpense of the Company or CM Management; (ii) demonstrably willful anddeliberate violations by the Executive of the Executive’s obligations underthis Agreement; (iii) the Executive’s gross neglect (other than any suchfailure resulting from incapacity due to physical or mental illness) or grossmisconduct in carrying out her duties resulting, in either case, in materialeconomic harm to the Company or CM Management; (iv) the final, non-appealableconviction by a court of law of, or plea of nolo contendere by, the Executiveof a felony.

 

(b)                                 A “Change in Control” shall mean theoccurrence during the Term of any one of the following events:

 

(i)                                     An acquisition (other than directly fromthe Company) of any shares of the Common Stock of the Company (“Common Shares”)or other voting securities of the Company by any “Person” (for purposes of thisSection only, as the term “person” is used for purposes of Section 13(d)or 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)),immediately after which such Person has “Beneficial Ownership” (within themeaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent(50%) or more of either (i) the then outstanding Common Shares or (ii) thecombined voting power of the Company’s then outstanding voting securitiesentitled to vote for the election of directors, trustees or their equivalent(the “Voting Securities”); provided, however, that in determining whether aChange in Control has occurred, Common Shares or Voting Securities which areacquired in a “Non-Control Acquisition” (as hereinafter defined) shall notconstitute an acquisition which would cause a Change in Control.  A “Non-Control Acquisition” shall mean anacquisition by (i) an employee benefit plan (or a trust forming a part thereof)maintained by (A) the Company or (B) any corporation or other Person of which amajority of its voting power or its voting equity securities or equity interestis owned, directly or indirectly, by the Company (for purposes of thisdefinition, a “Related Entity”), (ii) the Company or any Related Entity, or(iii) any Person in connection with a “Non-Control Transaction” (as hereinafterdefined); or

 

(ii)                                  The individuals who, on the EffectiveDate, are members of the Board (the “Incumbent Board”), (i) cease for anyreason (including, without limitation, any increase or decrease in the size ofthe Board) to constitute at least a majority of the members of the Board, or(ii) following a Merger (as hereinafter defined), do not constitute at least amajority of the Board of Directors or its equivalent of (x) the SurvivingCorporation (as hereinafter defined), if fifty percent (50%) or more of thecombined voting power of the then outstanding voting securities of theSurviving Corporation is not Beneficially Owned, directly or indirectly by aParent Corporation, or (y) if there is one or more Parent Corporations, theultimate Parent Corporation (as hereinafter defined); provided, however, thatif the election, or nomination for election by the Company’s commonshareholders, of any new director was approved by a vote of at least a majorityof the Incumbent Board, such new director shall, for purposes of this Plan, beconsidered as a member of the Incumbent Board; provided, further, however, thatno individual shall be considered a member of the Incumbent Board if suchindividual initially assumed office 

 

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as aresult of an actual or threatened solicitation of proxies or consents by or onbehalf of a Person other than the Board of Directors of the Company (a “ProxyContest”), including by reason of any agreement intended to avoid or settle anyProxy Contest; or

 

(iii)                               The consummation of:

 

(A)                              A merger, consolidation, reorganizationor joint venture with or into the Company or a direct or indirect subsidiary ofthe Company or in which securities of the Company are issued (a “Merger”),unless the Merger is a “Non-Control Transaction.”  A “Non-Control Transaction” shall mean:

 

(I)                                    the shareholders of the Companyimmediately before such Merger own directly or indirectly immediately followingthe Merger, in substantially similar proportion as among such shareholdersimmediately before the Merger, at least fifty percent (50%) of the outstandingcommon shares and the combined voting power of the outstanding votingsecurities of (x) the corporation or entity resulting from such Merger(the “Surviving Corporation”), if fifty percent (50%) or more of the combinedvoting power of the then outstanding voting securities of the SurvivingCorporation is not Beneficially Owned, directly or indirectly, by anothercorporation or entity (such other corporation or entity, or group ofcorporations or entities, being hereinafter called a “Parent Corporation”), or(y) if there is one or more Parent Corporations, the Parent Corporation;

 

(II)                                the individuals who were members of theIncumbent Board immediately prior to the execution of the agreement providingfor the Merger constitute at least a majority of the members of the Board of(x) the Surviving Corporation, if fifty percent (50%) or more of the combinedvoting power of the then outstanding voting securities of the SurvivingCorporation is not Beneficially Owned, directly or indirectly, by a ParentCorporation, or (y) if there is one or more Parent Corporations, the ParentCorporation; and

 

(III)                            no Person other than (1) the Company oranother corporation that is a party to the agreement of Merger, (2) any RelatedEntity, or (3) any employee benefit plan (or any trust forming a partthereof) that, immediately prior to the Merger, was maintained by the Company orany Related Entity, or (4) any Person who, immediately prior to the Merger hadBeneficial Ownership of fifty percent (50%) or more of the then outstandingCommon Shares or Voting Securities, has Beneficial Ownership, directly orindirectly, of fifty percent (50%) or more of the combined voting power of theoutstanding voting securities or common shares of (x) the SurvivingCorporation, if fifty percent (50%) or more of the combined voting power of thethen outstanding voting securities of the Surviving Corporation is notBeneficially Owned, directly or indirectly by a Parent Corporation, or (y) ifthere is one or more Parent Corporations, the Parent Corporation.

 

(B)                                A complete liquidation or dissolution ofthe Company; or

 

(C)                                The sale or other disposition of all orsubstantially all the assets of the Company and its subsidiaries taken as awhole to any Person or group of Persons in a single transaction or series oftransactions (other than a transfer to a Related Entity or under 

 

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conditionsthat would constitute a Non-Control Transaction with the disposition of assetsbeing regarded as a Merger for this purpose or the distribution to the Company’sshareholders of the stock of a Related Entity or any other assets); or

 

(iv)                              Any change in the constitution,capitalization, terms or conditions of the Preferred Stock of the Company thatresults in a Change on Control as described in subparagraphs 4(b)(i), (ii) and(iii) above; or

 

(v)                                 Any transaction or event that causes orresults in the Company becoming an externally managed real estate investmenttrust.

 

Notwithstandingthe foregoing, a Change in Control shall not be deemed to occur solely becauseany Person (the “Subject Person”) acquired Beneficial Ownership of more thanthe permitted amount of the then outstanding Common Shares or Voting Securitiesas a result of the acquisition of Common Shares or Voting Securities by theCompany which, by reducing the number of Common Shares or Voting Securitiesthen outstanding, increases the proportional number of shares BeneficiallyOwned by the Subject Persons; provided, that if a Change in Control would occur(but for the operation of this sentence) as a result of the acquisition ofCommon Shares or Voting Securities by the Company, and after such shareacquisition by the Company, the Subject Person becomes the Beneficial Owner ofany additional Common Shares or Voting Securities which increases thepercentage of the then outstanding Common Shares or Voting SecuritiesBeneficially Owned by the Subject Person, then a Change in Control shall occur.

 

(c)                                  “Good Reason” will exist only upon (i)any material adverse change in the Executive’s titles, powers,responsibilities, authorities or reporting relationships, (ii) any materialbreach by the Company of any provision of this Agreement or any OtherAgreement, (iii) any reduction in the Executive’s base compensation (including,without limitation, any guaranteed minimum cash or equity bonuses or awards),(iv) any circumstance in which the President and/or the Chief Executive Officerof the Company has directed the Executive regarding the disclosure,nondisclosure or certification of financial information regarding the Company,and the Executive has determined in her professional opinion, whichdetermination is supported by written advice of the primary external corporatecounsel to the Company immediately prior to such determination, that suchdisclosure, nondisclosure or certification would reasonably be expected tocause or result in a violation of federal securities laws, or (v) therelocation of the Executive’s principal place of performance more than 20 milesfrom its location on the date hereof in Rockville, Maryland, in each case whichoccurs without the Executive’s prior written consent and which is not fullycorrected by the Company within 30 days of written notice to the Board.

 

5.                                       Full Settlement. The obligation of the Company and/or CM Management to make the paymentsor grant the benefits provided for in this Agreement and otherwise to performits or their obligations hereunder shall not be affected by any set-off,counterclaim, recoupment, defense or other claim, right or action which theCompany or CM Management may have against the Executive or others, except as otherwiseprovided in this Agreement.  In no eventshall the Executive be obligated to seek other employment or take any otheraction by way of mitigation of the amounts payable or benefits granted to theExecutive under any of the provisions of this 

 

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Agreement and such amounts or benefits shall not be reduced because theExecutive obtains other employment, except as otherwise provided in thisAgreement.

 

6.                                       Applicable Law. Any question as to the scope, interpretation and effect of thisAgreement will be resolved under the substantive and procedural laws of theState of Maryland and the United States.

 

7.                                       Enforceability. All provisions and portions of this Agreement are severable.  If any provision or portion of this Agreementor the application of any provision or portion of the Agreement shall bedetermined to be invalid or unenforceable to any extent or for any reason, allother provisions and portions of this Agreement shall remain in full force andeffect and shall continue to be enforceable to the fullest and greatest extentpermitted by law.

 

8.                                       No Representations. The Executive agrees that no promises, other than the promises in thisAgreement, have been made to him by or on behalf of the Company or CMManagement.  She agrees that in executingthis Agreement she is not relying upon any statement or representation, otherthan those set forth herein, made by or on behalf of the Company or CMManagement concerning her employment by the Company or CM Management.

 

9.                                       Successors.

 

(a)                                  This Agreement is personal to theExecutive and without the prior written consent of the Company shall not beassignable by the Executive.  ThisAgreement shall inure to the benefit of and be enforceable by the Executive’slegal representatives.

 

(b)                                 This Agreement shall inure to the benefitof and be binding upon the Company, CM Management and their successors andassigns.

 

(c)                                  The Company shall require any successor(whether direct or indirect, by purchase, merger, consolidation or otherwise)to all or substantially all the business and/or assets of the Company to assumeexpressly and agree to perform this Agreement in the same manner and to thesame extent that the Company would be required to perform it if no suchsuccession had taken place.

 

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INWITNESS WHEREOF, the parties have executed this Agreement effective as of theEffective Date.

 

 
|   | CRIIMI MAE INC.                     |
|--------|-------------------------------------|
|   |                                |
|   |                                |
|   | By:                                 | /s/ Mark Libera |   |
|   | Vice President  and General Counsel |
|   |                                |
|   |                                |
|   | CRIIMI MAE  MANAGEMENT, INC.        |
|   |                                |
|   |                                |
|   | By:                                 | /s/ Mark Libera |   |
|   | Vice President  and General Counsel |
|   |                                |
|   |                                |
|   | EXECUTIVE                           |
|   |                                |
|   |                                |
|   | /s/ Cynthia O.  Azzara              |   |
|   | Cynthia O.  Azzara                  |
|        |                                     |  |  |  |  |

 

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