Exhibit 10.26


 


CHANGE IN CONTROL AGREEMENT


 


This CHANGE IN CONTROL AGREEMENT (this “Agreement”) is entered into by
and among CRIIMI MAE Inc. (the “Company”), a Maryland corporation, CRIIMI MAE
Management, Inc. (“CM Management”), a Maryland corporation, and Mark R. Jarrell
(the “Executive”) and shall be effective as of February 1, 2005 (the “Effective
Date”).


 


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


 


2.                                       Change in Control Benefits.


 


(a)                                  If within two years of a Change in
Control the Executive’s employment with the Company and/or CM Management is
terminated by the Company or CM Management (as applicable) without Cause (as
defined below) or by the Executive for Good Reason (as defined below), the
Company and CM Management shall be relieved of any further salary or
compensation payments to the Executive other than as expressly provided in this
Paragraph 2.  Notwithstanding the
preceding sentence, in return for the execution and delivery by the Executive
of a general release and waiver of claims in favor of the Company and its
affiliates, the Executive shall promptly receive from the Company and/or CM
Management a lump sum severance payment (subject to appropriate payroll and tax
withholding and deductions) equal in amount to $2,500,000.


 


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


 


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


 





















 


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


 


(d)                                 The termination of the Executive’s
employment with the Company or CM Management shall not affect any of the
obligations of the Executive, the Company or CM Management that may arise under
Paragraph 3 below.


 


3.                                       Nonsolicitation, Developments,
Nondisparagement and Confidentiality.  In
consideration for the benefits provided pursuant to this Agreement, the Executive
agrees:


 


(a)                                  During the Term and for a period of two
years following the termination of the Executive’s employment with the Company
and CM Management, he will not, directly or indirectly, (i) induce or attempt
to induce, any employees or agents of the Company and/or any of its affiliates
to do anything from which the Executive is restricted by reason of this
Agreement, or (ii) offer or aid others to offer employment to any employees or
agents of the Company and/or its any of its affiliates.


 


(b)                                 The Executive, the Company and CM
Management agree that, during the Term and following the termination of the
Term, 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, developments
and relationships with customers and prospective customers relating in any way
to the present products, services, or business of the Company, CM Management
and their affiliates (collectively “Developments”) that the Executive first
conceived, made, invented or suggested during or as a result of his employment
by the Company or CM Management, whether acting alone or in conjunction with
others, shall be the sole and absolute property of the Company and/or CM
Management (as applicable) free of any rights of any kind on the part of the
Executive.  The Executive shall promptly
make full disclosure of all Developments to the Company.  The Executive agrees to do all acts and
things (including, among others, the execution and delivery of patent and
copyright applications and instruments of assignment) deemed by the Company to
be necessary or desirable at any time in order to effect the full assignment to
the Company of his rights, if any, to such Developments.


 





















 


(d)                                 The Executive recognizes that, in
connection with his employment by the Company and CM Management, he may learn
of, and/or it may be desirable or necessary for the Company and CM Management
to disclose to him oral or written confidential information (“Confidential
Information”).  The Executive understands
that Confidential Information is valuable and proprietary to the Company and CM
Management (or to third parties that have entrusted the Confidential
Information to the Company and CM Management). 
The Executive agrees that, except as required by his employment with the
Company and CM Management or by order of a court of competent jurisdiction, he
will not at any time, directly or indirectly, use, publish, communicate,
describe, disseminate, or otherwise disclose Confidential Information to any
person or entity without the express prior written consent of the Company.  The term Confidential Information shall
include, but shall not be limited to: 
(i) customer and client lists, asset lists, lists of potential
customers, clients or properties and details of agreements with customers or
regarding assets; (ii) acquisition, expansion, marketing, financial and other
business information and plans of the Company and CM Management; (iii) research
and development; (iv) data compiled by the Company and CM Management; (v)
computer programs; (vi) sources of supply; (vii) Confidential Information
developed by specialized consultants or contractors for the Company and CM
Management; (viii) purchasing, operating, servicing and other cost data; (ix) special
customer needs, cost and pricing data; and (x) employee information (including,
but not limited to, personnel, payroll, compensation and benefit data and
plans), including all such information recorded in manuals, memoranda,
projections, minutes, plans, drawings, designs, formula books, specifications,
computer programs and records, whether or not legended or otherwise identified
by the Company or CM Management as Confidential Information, as well as such
information that is the subject of meetings and discussions and not
recorded.  Notwithstanding anything in
this subparagraph 3(d), Confidential Information shall not include the contents
of Executive’s rolodex or his Microsoft contacts file.  Confidential Information also shall not
include such information that is generally available to the public (other than
as a result of a disclosure by the Executive) or that is disclosed to the
Executive by a third party under no obligation to keep such information
confidential.


 


(e)                                  Upon the termination of the Executive’s
employment with the Company and CM Management or upon the Company’s request
prior to such termination, whichever is sooner, the Executive shall immediately
deliver to the Company all plans, designs, listings, manuals, records,
notebooks, and similar repositories of or containing Confidential Information
or other documents and data relating to the Company’s and CM Management’s
products, services, or business then in the Executive’s possession or control
or 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’s employment with the Company and CM Management, the Executive shall
immediately deliver to the Company all the property of the Company and CM
Management in his possession or control including, but not limited to,
computer(s) and office equipment.


 


(f)                                    Any substantial or material breach by the
Executive of any of the obligations set forth in this Paragraph 3 shall
terminate any further obligations that the


 





















 


Company or CM Management
may have relative to providing compensation or benefits to the Executive and
shall result in the immediate expiration and voiding of any outstanding
options, rights and other awards, vested or unvested.


 


4.                                       Definitions.


 


(a)                                  “Cause” shall exist only if, after
reasonable investigation, a majority of the Board of Directors of the Company
(the “Board”), after providing the Executive (and his counsel, if he so
chooses) a reasonable opportunity to be heard, finds that one or more of the
following conditions exists:  (i) an act
or acts of personal dishonesty or misrepresentation made by the Executive and
intended to result in substantial personal enrichment of the Executive at the
expense of the Company or CM Management; (ii) demonstrably willful and
deliberate violations by the Executive of the Executive’s obligations under
this Agreement; (iii) the Executive’s gross neglect (other than any such
failure resulting from incapacity due to physical or mental illness) or gross
misconduct in carrying out his duties resulting, in either case, in material
economic harm to the Company or CM Management; (iv) the final, non-appealable
conviction by a court of law of, or plea of nolo contendere by, the Executive
of a felony.


 


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


 


(i)                                     An
acquisition (other than directly from the 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 this Section 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 the meaning 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) the combined voting power of the Company’s then outstanding
voting securities entitled to vote for the election of directors, trustees or
their equivalent (the “Voting Securities”); provided, however, that in
determining whether a Change in Control has occurred, Common Shares or Voting
Securities which are acquired in a “Non-Control Acquisition” (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control.  A “Non-Control Acquisition”
shall mean an acquisition 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 a majority of its voting power or its voting equity securities
or equity interest is owned, directly or indirectly, by the Company (for purposes
of this definition, a “Related Entity”), (ii) the Company or any Related
Entity, or (iii) any Person in connection with a “Non-Control Transaction” (as
hereinafter defined); or


 


(ii)                                  The
individuals who, on the Effective Date, are members of the Board (the “Incumbent
Board”), (i) cease for any reason (including, without limitation, any increase
or decrease in the size of the 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 a majority of the Board of Directors or its equivalent
of (x) the


 





















 


Surviving Corporation (as
hereinafter defined), if fifty percent (50%) or more of the combined voting
power of the then outstanding voting securities of the Surviving Corporation is
not Beneficially Owned, directly or indirectly by a Parent Corporation, or (y)
if there is one or more Parent Corporations, the ultimate Parent Corporation
(as hereinafter defined); provided, however, that if the election, or
nomination for election by the Company’s common shareholders, of any new
director was approved by a vote of at least a majority of the Incumbent Board,
such new director shall, for purposes of this Plan, be considered as a member
of the Incumbent Board; provided, further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of an actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of Directors of the
Company (a “Proxy Contest”), including by reason of any agreement intended to
avoid or settle any Proxy Contest; or


 


(iii)                               The
consummation of:


 


(A)                              A
merger, consolidation, reorganization or joint venture with or into the Company
or a direct or indirect subsidiary of the 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 Company immediately before such Merger own directly or
indirectly immediately following the Merger, in substantially similar
proportion as among such shareholders immediately before the Merger, at least
fifty percent (50%) of the outstanding common shares and the combined voting
power of the outstanding voting securities of (x) the corporation or
entity resulting from such Merger (the “Surviving Corporation”), if fifty
percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Surviving Corporation is not Beneficially Owned,
directly or indirectly, by another corporation or entity (such other
corporation or entity, or group of corporations 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 the Incumbent Board immediately prior to the
execution of the agreement providing for 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 combined voting power of the then
outstanding voting securities of the Surviving Corporation is not Beneficially
Owned, directly or indirectly, by a Parent Corporation, or (y) if there is one
or more Parent Corporations, the Parent Corporation; and


 


(III)                            no
Person other than (1) the Company or another corporation that is a party to the
agreement of Merger, (2) any Related Entity, or (3) any employee benefit
plan (or any trust forming a part thereof) that, immediately prior to the
Merger, was maintained by the Company or any Related Entity, or (4) any Person
who, immediately prior to the Merger had Beneficial Ownership of fifty percent
(50%) or more of the then outstanding Common Shares or Voting Securities, has
Beneficial 


 





















 


Ownership, directly or
indirectly, of fifty percent (50%) or more of the combined voting power of the
outstanding voting securities or common shares of (x) the Surviving
Corporation, if fifty percent (50%) or more of the combined voting power of the
then outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly by a Parent Corporation, or (y) if
there is one or more Parent Corporations, the Parent Corporation.


 


(B)                                A
complete liquidation or dissolution of the Company; or


 


(C)                                The
sale or other disposition of all or substantially all the assets of the Company
and its subsidiaries taken as a whole to any Person or group of Persons in a
single transaction or series of transactions (other than a transfer to a
Related Entity or under conditions that would constitute a Non-Control
Transaction with the disposition of assets being regarded as a Merger for this
purpose or the distribution to the Company’s shareholders 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 that results in a Change on Control as described
in subparagraphs 4(b)(i), (ii) and (iii) above; or


 


(v)                                 Any
transaction or event that causes or results in the Company becoming an
externally managed real estate investment trust.


 


Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur solely because any
Person (the “Subject Person”) acquired Beneficial Ownership of more than the
permitted amount of the then outstanding Common Shares or Voting Securities as
a result of the acquisition of Common Shares or Voting Securities by the
Company which, by reducing the number of Common Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned 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 of Common Shares
or Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Common Shares or Voting Securities which increases the percentage of the then
outstanding Common Shares or Voting Securities Beneficially 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 material breach by the Company of any provision of this Agreement or any
Other Agreement, (iii) any reduction in the Executive’s base compensation
(including, without limitation, any guaranteed minimum cash or equity bonuses
or awards), or (iv) the relocation of the Executive’s principal place of
performance from its location on the date hereof in New York, New York (or such
other location within the New York metropolitan area within a reasonable
commuting distance from the Executive’s residence in Huntington, New York), in
each case which occurs without the Executive’s


 





















 


prior written
consent and which is not fully corrected 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 payments
or grant the benefits provided for in this Agreement and otherwise to perform
its or their obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the Company
or CM Management may have against the Executive or others, except as otherwise
provided in this Agreement.  In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable or benefits granted to the
Executive under any of the provisions of this Agreement and such amounts or
benefits shall not be reduced because the Executive obtains other employment,
except as otherwise provided in this Agreement.


 


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


 


7.                                       Enforceability. 
All provisions and portions of this Agreement are severable.  If any provision or portion of this Agreement
or the application of any provision or portion of the Agreement shall be
determined to be invalid or unenforceable to any extent or for any reason, all
other provisions and portions of this Agreement shall remain in full force and
effect and shall continue to be enforceable to the fullest and greatest extent
permitted by law.


 


8.                                       No Representations. 
The Executive agrees that no promises, other than the promises in this
Agreement, have been made to him by or on behalf of the Company or CM
Management.  He agrees that in executing
this Agreement he is not relying upon any statement or representation, other
than those set forth herein, made by or on behalf of the Company or CM
Management concerning his employment by the Company or CM Management.


 


9.                                       Successors.


 


(a)                                  This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive.  This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.


 


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


 


(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 assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.


 





















 


IN WITNESS WHEREOF, the parties have executive this Agreement effective
as of the Effective Date.


 


 


	
   

  	
  CRIIMI MAE INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Libera

  	
   

  
	
   

  	
   

  	
  Mark Libera

  
	
   

  	
   

  	
  Vice President and General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CRIIMI MAE MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Libera

  	
   

  
	
   

  	
   

  	
  Mark Libera

  
	
   

  	
   

  	
  Vice President and General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mark R. Jarrell

  	
   

  
	
   

  	
  Mark R. Jarrell