CRIIMI MAE INC. DEFERRED COMPENSATION PLAN

Exhibit 4

 

CRIIMI MAE INC.

DEFERRED COMPENSATION PLAN

 

 

1.             Purpose

 

The purpose of the CRIIMI MAE Inc. Deferred Compensation Plan (the “Plan”) is to promote the interests of CRIIMI MAE Inc. (the “Company”) and its stockholders by increasing the proprietary interests of the directors and employees eligible to participate in the Plan in the growth and performance of the Company by providing such directors and employees with the opportunity to defer all or a portion of their Annual Cash Retainer, Meeting Fees, Compensation and Restricted Stock, as applicable, in the form of Restricted Stock Units (as such terms are defined herein).

 

The Plan is not intended to meet the qualification requirements of Section 401(a) of the Code, but is intended to be an unfunded arrangement providing deferred compensation to non-employee directors and eligible employees who are part of a select group of management or highly compensated employees of the Company within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.  The Plan is intended to be exempt from the requirements of Parts 2, 3 and 4 of Title I of ERISA as a “top hat” plan, and to be eligible for the alternative method of compliance for reporting and disclosure available for unfunded “top hat” plans.

 

2.             Definitions

 

Whenever the following terms are used in this document, they shall have the meanings stated below.

 

(a)           “Account” shall mean the account maintained by the Company on behalf of a Participant to record that portion, if any, of the Participant’s:

 

(i)            Annual Cash Retainer and Meeting Fees that an Eligible Director elects to defer pursuant to Section 7;

 

(ii)           Compensation that an Eligible Employee elects to defer pursuant to Section 7; and

 

(iii)          Restricted Stock Grants that an Eligible Director or Eligible Employee elects to defer pursuant to Section 6.

 

(b)           “Affiliate” shall mean any entity, directly or indirectly, controlled by, controlling or under common control with the Company or other entity acquiring, directly or indirectly, all or substantially all of the assets and business of the Company, whether by operation of law or otherwise.

 

 

(c)           “Annual Cash Retainer” shall mean the amount of annual cash compensation payable to each Eligible Director for service on the Board, as set from time to time by the Board.

 

(d)           “Beneficiary” shall mean the person(s) designated by a Participant on the form designated by the Board to receive benefits to which a Beneficiary is entitled under and in accordance with provisions of the Plan.  The Participant’s spouse, or if none (or no longer living), then the Participant’s estate shall be the Beneficiary if:

 

(i)            the Participant has not designated a Beneficiary, or

 

(ii)           the designated Beneficiary has predeceased the Participant.

 

(e)           “Board” shall mean the Board of Directors of the Company.

 

(f)            “Change in Control” shall mean the occurrence of any of the following:

 

(i)            The “acquisition” by any “Person” (as the term person is used for purposes of Section 13(d) or 14(d) of the Exchange Act (as defined below) of “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of any securities of the Company which generally entitles the holder thereof to vote for the election of directors of the Company (the “Voting Securities”) which, when added to the Voting Securities then “Beneficially Owned” by such Person, would result in such Person either “Beneficially Owning” fifty percent (50%) or more of the combined voting power of the Company’s then outstanding Voting Securities or having the ability to elect fifty percent (50%) or more of the Company’s directors; provided, however, that for purposes of this paragraph (i), a Person shall not be deemed to have made an acquisition of Voting Securities if such Person: (A) becomes the Beneficial Owner of more than the permitted percentage of Voting Securities solely as a result of open market acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by such Person; (B) is the Company or any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a “Controlled Entity”); (C) acquires Voting Securities in connection with a “Non-Control Transaction” (as defined in paragraph (iii) below; or (D) becomes the Beneficial Owner of more than the permitted percentage of Voting Securities as a result of a transaction approved by a majority of the Incumbent Board (as defined in paragraph (ii) below); or

 

(ii)           The individuals who, as of the Effective Date of this Plan, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least a majority of the Board; provided, however, that if either the election of any new director or the nomination for election of any new director by the Company’s stockholders was approved by a vote of at least a majority of the Incumbent Board, such new director shall 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

 

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initially assumed office as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

 

(iii)          The consummation of a merger, consolidation or reorganization involving the Company (a “Business Combination”), unless (A) the stockholders of the Company, immediately before the Business Combination, own directly or indirectly immediately following the Business Combination, at least fifty percent (50%) of the combined voting power of the outstanding voting securities of the corporation resulting from the Business Combination (the “Surviving Corporation”) in substantially the same proportion as their ownership of the Voting Securities immediately before the Business Combination, and (B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for the Business Combination constitute at least a majority of the members of the Board of Directors of the Surviving Corporation, and (C) no Person (other than (x) the Company or any Controlled Entity, (y) a trustee or other fiduciary holding securities under one or more employee benefit plans or arrangements (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Controlled Entity, or (z) any Person who, immediately prior to the Business Combination, had Beneficial Ownership of fifty percent (50%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifty percent (50%) or more of the combined voting power of the Surviving Corporation’s then outstanding voting securities (a Business Combination described in clauses (A), (B) and (C) of this paragraph shall be referred to as a “Non-Control Transaction”); or

 

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

 

(v)           The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Controlled Entity).

 

Notwithstanding the foregoing, if Participant’s employment with the Company or any Subsidiary or Affiliate or service with the Board is terminated and Participant reasonably demonstrates that such termination (x) was at the request of a third party who has indicated an intention or has taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control or (y) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes hereof, the date of a Change in Control with respect to the Participant shall mean the date immediately prior to the date of such termination of employment or service.

 

A Change in Control shall not be deemed to occur solely because fifty percent (50%) or more of the then outstanding Voting Securities is Beneficially Owned by (x) a trustee or other fiduciary holding securities under one or more employee benefit plans or arrangements (or any trust forming a part thereof) maintained by the Company or

 

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any Controlled Entity or (y) any corporation which, immediately prior to its acquisition of such interest, is owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock in the Company immediately prior to such acquisition.

 

(g)           “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(h)           “Company” shall mean CRIIMI MAE Inc.

 

(i)            “Compensation” shall mean total cash compensation of an Eligible Employee, including base salary (including any elective deferrals under Code Sections 125, 132(f)(4), 402(e)(3) or 402(h)), bonus, other cash awards, and commissions.

 

(j)            “Deferral Form” shall mean the form filed by a Participant with the Company to elect deferral of all or a portion of his or her Annual Cash Retainer, Meeting Fees, Committee Chair Fees, Compensation or Restricted Stock grants.

 

(k)           “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

(l)            “Effective Date” shall mean October 1, 2004.

 

(m)          “Eligible Director” shall mean a member of the Board who is not an employee of the Company or any Subsidiary or Affiliate.

 

(n)           “Eligible Employee” shall mean an employee of the Company or any Subsidiary or Affiliate who is part of a select group of management or highly compensated employees within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and who is selected for participation herein by the Board, in its sole discretion.

 

(o)           “Fair Market Value” shall mean the closing price for a Share as reported on the principal exchange on which the Shares are listed for the date in question, or if there were no sales on such date, the most recent prior date on which there were sales.

 

(p)           “Grant Date” shall mean the date of grant of Restricted Stock or crediting of Restricted Stock Units under the Plan.

 

(q)           “Meeting Fees” shall mean the fees determined from time to time by the Board payable to an Eligible Director in cash, Shares or Restricted Stock Units (as determined pursuant to Section 7) for attending each meeting of the Board or a committee thereof or for serving as a committee chair.  Meeting Fees shall be paid to an Eligible Director in cash or credited to the Eligible Director’s Account as Restricted Stock Units, as the case may be, in arrears in accordance with policies adopted by the Board, as of the last business day of each calendar quarter in which an Eligible Director attends a meeting for which a Meeting Fee is payable.

 

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(r)            “Participant” shall mean an Eligible Employee or Eligible Director.

 

(s)           “Plan” shall mean the CRIIMI MAE Inc. Deferred Compensation Plan, as amended from time to time.

 

(t)            “Restricted Stock” shall mean a grant of Restricted Stock under the 2001 Plan.

 

(u)           “Restricted Stock Units” shall mean the units credited to a Participant’s Account pursuant to Sections 6 and/or 7.  Each Restricted Stock Unit shall represent one Share, without transferring to the Participant any of the attributes of ownership of a Share except as expressly provided herein.

 

(v)           “Share” shall mean a share of the Company’s common stock, par value $.01 per share.

 

(w)          “Subsidiary” shall mean any corporation which is a subsidiary corporation within the meaning of Section 424(f) of the Code with respect to the Company.

 

(x)            “Termination of Service” means the termination of an Eligible Director’s service as a member of the Board or of an Eligible Employee’s employment with the Company and any Subsidiary or Affiliate for any reason.

 

(y)           “2001 Plan” shall mean the CRIIMI MAE Inc. 2001 Stock Incentive Plan, as amended from time to time.

 

(z)            “Valuation Date” shall mean the last business day of each calendar quarter.