Document:

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)

  

 

2

 

	
   

  	
   

  	
  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

  

 

3

 

	
   

  	
   

  	
  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

 

6

 

Accepted and agreed to:

 

 

	
  /s/ David B. Iannarone

  	
   

  	
  August 26, 2003

  	
   

  
	
  David B. Iannarone

  	
  Date

  

 

7Exhibit 10.3

 

CRIIMI
MAE Inc.

11200 Rockville Pike, Suite 400

Rockville, MD 20852

 

August 26, 2003

 

 

Cynthia O. Azzara

 

Re:          Termination of Employment Agreement
Letter

 

Dear Ms. Azzara:

 

Effective as
of August 25, 2003, CRIIMI MAE Inc. (“CRIIMI”) and CRIIMI MAE Management, Inc.
(“Management” and collectively with CRIIMI, the “Company”) and you agree that
any and all previous employment, severance, service or similar agreements
between CRIIMI and/or Management and you (whether written or oral) including,
without limitation, your Employment Agreement, dated July 25, 2001, as amended,
between CRIIMI and you (the “Employment Agreement”) shall be terminated and
cease to have any effect, including without limitation, Section 6.5 of the
Employment Agreement, notwithstanding any survival clauses therein.  You acknowledge and agree that this letter
agreement (the “Agreement”)  provides
adequate consideration for the termination of your Employment Agreement and
this Agreement is the only document which sets forth your rights in
consideration of such termination of the Employment Agreement. As consideration
for the termination of the Employment Agreement and for other good
consideration, including, without limitation, the Company agreeing to enter
into the Offer Letter, between the CRIIMI MAE Inc., CRIIMI MAE Management, Inc.
and you, dated as of August 26, 2003, the receipt and satisfaction of which are
hereby acknowledged, the parties hereto agree as follows:

 

1.                                       You
are due and owed by the Company the amount of $1,086,889, and the Company shall
pay you such amount, less applicable withholding taxes, no later than the close
of business on August 29, 2003.

 

2.                                       The
rights to exercise options to purchase option shares in accordance with the
vesting schedule set forth in the Incentive Stock Option Agreement dated
November 16, 2001, the Nonqualified Stock Option Agreement dated June 5, 2002,
and the Incentive Stock Option Agreement dated June 5, 2002 shall not be
affected by termination of employment for whatever reason; provided, that,
as a matter of law, any options which are intended to qualify as “incentive
stock options” within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”) which are exercised following the

 

1

 

90th
day after your termination of employment will cease to qualify as incentive
stock options and will become non-qualified stock options.

 

3.                                       You
shall have the right until September 15, 2003 to purchase the automobile
currently being provided to you by the Company at 90% of such automobile’s fair
market value as reasonably determined by the parties hereto.

 

4.                                       Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company or any of their
subsidiaries to or for the benefit of 
you, whether paid or payable, pursuant to the terms of this Agreement (a
“Payment”) would be subject to the excise tax imposed by Section 4999 of the
Code or similar section or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), then you shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by you of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, you retain an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.

 

5.                                       If,
with respect to any alleged failure by the Company or any of their subsidiaries
to comply with any of the terms of this Agreement, you hire legal counsel with
respect to this Agreement or institute any negotiations or institute or respond
to legal action to assert or defend the validity of, enforce your rights under,
or recover damages for breach of this Agreement and thereafter the Company or
any of their subsidiaries is found in a judgment no longer subject to review or
appeal to have breached this Agreement in any material respect, then the
Company shall indemnify you for your actual expenses for attorneys’ fees and
disbursements, together with such additional payments, if any, as may be
necessary so that the net after-tax payments to you equal such fees and
disbursements.

 

6.                                       The
provisions of this Agreement are severable, and if any one or more provisions
may be determined to be illegal or otherwise unenforceable, in whole or in
part, the remaining provisions and any partially unenforceable provision to the
extent enforceable nevertheless shall be binding and enforceable.

 

7.                                       The
rights and obligations of the Company, and it subsidiaries and affiliates under
this Agreement shall inure to the benefit or, and shall be binding on, the
Company and its subsidiaries and affiliates, and their respective successors
and assigns.

 

8.                                       The
failure of either party to enforce any provision of this Agreement shall not in
any way be construed as a waiver of any such provision as to any future

 

2

 

violations
thereof, not prevent that party thereafter from enforcing each and every other
provision of this Agreement.  The rights
granted the parties herein are cumulative and the waiver of any single remedy
shall not constitute a waiver of such party’s right to assert all other legal
remedies available to it under the circumstances.

 

9.                                       This
Agreement supersedes all prior agreements and understandings between the
parties with respect to the subject matter hereof and it may not be modified or
terminated orally.  No modification or
attempted waiver shall be valid unless in writing and signed by the party
against whom the same is sought to be enforced.

 

10.                                 This
Agreement shall be governed by, and construed in accordance with the laws of
the State of Maryland, without reference to provisions that refer a matter to
the law of any other jurisdiction.  Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in Montgomery County, Maryland in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon
the award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof.  The
arbitrator or arbitrators shall be deemed to possess the powers to issue
mandatory orders and restraining orders in connection with such arbitration.
The expenses of the arbitration shall be borne equally by the parties to the
arbitration, provided that each party shall pay for and bear costs of its own
experts and counsel’s fees.

 

11.                                 All
payments and benefits required to be made by the Company hereunder to you shall
be subject to the withholding of such amounts relating to taxes and other
government assessments as the Company may reasonably determine it should
withhold pursuant to any applicable law, rule or regulation.

 

12.                                 The
parties acknowledge and agree that this Agreement was jointly drafted by the
Company on the one side and by you on the other side and in the case of any
ambiguity contained in this Agreement, such ambiguity shall not be interpreted
against the drafter.  YOU ACKNOWLEDGE
AND AGREE THAT YOU HAVE READ AND UNDERSTAND THE TERMS OF THIS AGREEMENT AND YOU
HAVE VOLUNTARILY AGREED TO THESE TERMS WITHOUT COERCION OR UNDUE PERSUASION BY
THE COMPANY OR ANY OFFICER, DIRECTOR OR OTHER AGENT THEREOF AND THAT YOU HAVE
BEEN ENCOURAGED BY THE COMPANY TO SEEK, AND HAVE SOUGHT AND RECEIVED, AT YOUR
OWN EXPENSE, COMPETENT LEGAL COUNSEL IN YOUR REVIEW AND CONSIDERATION OF THIS
AGREEMENT AND ITS TERMS.

 

3

 

13.                                 In
consideration of the Company’s agreement to enter into this Agreement and pay
the amounts contemplated hereunder, you agree to the limited release of the
Company and its respective current and former officers, directors,
shareholders, employees, representatives, heirs, attorneys and agents, as well
as its respective predecessors, parent companies, subsidiaries, affiliates
divisions, successors and assigns and their respective current and former
officers, directors, shareholders, employees, representatives, attorneys and
agents (the “Released Parties”) from all claims, liabilities, and causes of
action which you had, now have or may have against the Released Parties related
to your employment prior to the date hereof and arising under: (i) any claim,
tort or cause of action for wrongful or unlawful discharge or demotion,
violation of public policy, invasion of privacy, intentional or negligent
infliction of emotional distress, defamation, unlawful effort to prevent
employment, discrimination on the basis of race, color, sex, national origin,
ancestry, religion, age, disability, handicap, medical condition or marital
status; (ii) Title VII of the Civil Rights Act of 1964, as amended; (iii) The
National Labor Relations Act, as amended; (iv) The Civil Rights Act of 1991;
(v) Sections 1981 through 1988 of Title 42 of the United States Code, as
amended; (vi) The Immigration Reform Control Act, as amended; (vii) The
Americans With Disabilities Act of 1990, as amended; (viii) The Age
Discrimination in Employment Act of 1967, as amended; (iv) The Occupational
Safety and Health Act, as amended; (x) The Family and Medical Leave Act of
1993; (xi) Maryland Occupational Health and Safety Laws; (xii) Maryland Fair
Employment Practice Act; (xiii) Montgomery County Discrimination Laws and (xiv)
any claim relating to your Employment Agreement or the termination thereof.   This release shall not include any claim
arising under any national, state or local statute, law, or ordinance other
than those herein delineated, and shall specifically exclude any claims,
liabilities, causes of action or attorneys’ fees arising from the Company’s obligations
under this Agreement, your rights to accrued benefits under the Employee
Retirement Income Security Act of 1974, as amended, and your rights to receive
all insurance, including indemnification and defense rights and benefits you
are eligible to receive from the Company. This limited release is solely for
the benefit of the Released Parties and shall in no way release any rights or
benefits to which you may be entitled from any other entity or person.

 

[SIGNATURE PAGE NEXT]

 

4

 

The Company
and you have executed this Agreement, intending to be bound legally as of
August 26, 2003.

 

	
   

  	
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  CRIIMI MAE
  Inc.

  
	
   

  	
   A Maryland Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry
  Blattman

  
	
   

  	
  Name:

  	
  Barry
  Blattman

  
	
   

  	
  Its:

  	
  Chairman,
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  AND

  
	
   

  	
   

  	
   

  
	
   

  	
  CRIIMI MAE
  Management, Inc.

  
	
   

  	
   A Maryland Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry
  Blattman

  
	
   

  	
  Name:

  	
  Barry
  Blattman

  
	
   

  	
  Its:

  	
  Chairman,
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Cynthia
  O. Azzara

  
	
   

  	
  Cynthia O.
  Azzara

  
					

 

5

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