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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 11, 1996
REGISTRATION NO. 333-1009
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CWM MORTGAGE HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
35 NORTH LAKE AVENUE
PASADENA, CA 91101
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DELAWARE 95-3983415
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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(800) 669-2300
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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MICHAEL W. PERRY, EXECUTIVE VICE PRESIDENT
CWM MORTGAGE HOLDINGS, INC.
35 NORTH LAKE AVENUE
PASADENA, CALIFORNIA 91101
(800) 669-2300
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
----------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on the Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ Information contained herein is subject to completion or amendment. A +
+ registration statement relating to these securities has been filed with the +
+ Securities and Exchange Commission. These securities may not be sold nor +
+ may offers to buy be accepted prior to the time the registration statement +
+ becomes effective. This prospectus shall not constitute an offer to sell +
+ or the solicitation of an offer to buy nor shall there be any sale of these +
+ securities in any State in which such offer, solicitation or sale would be +
+ unlawful prior to registration or qualification under the securities laws +
+ of any such State. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 11, 1996
PROSPECTUS
CWM MORTGAGE HOLDINGS, INC.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Dividend Reinvestment and Stock Purchase Plan (the "Plan") of CWM
Mortgage Holdings, Inc. (the "Company") provides holders of record and
beneficial owners of shares of Common Stock, $.01 par value, of the Company
(the "Common Stock") with a simple and convenient method of investing cash
dividends in additional shares of stock at a 1% discount (subject to change)
from the market price (as determined in accordance with the Plan), to the
extent shares are acquired directly from the Company. (If the shares are
acquired in open market transactions by the Plan Administrator (as defined in
Question 4), the discount will not be available). Common Stock may also be
purchased on a monthly basis with optional cash payments made by participants
in the Plan at a 3% discount (subject to change) from the market price (as
determined in accordance with the Plan). Each of the discounts is subject to
change (but will not vary from the range of 0% to 5%) from time to time or
discontinuance at the Company's discretion after a review of current market
conditions, the level of participation in the Plan and the Company's current
and projected capital needs. Except with respect to the Waiver Discount (as
defined below), the Company will provide participants with written notice of a
change in the applicable discount rate at least thirty days prior to the
relevant record date.
Brokers and nominees may reinvest dividends and make optional cash payments
on behalf of beneficial owners. Those holders of Common Stock who do not
participate in the Plan will receive cash dividends, as declared, in the usual
manner.
To enroll in the Plan, simply complete the enclosed Authorization Form and
return it in the envelope provided. Enrollment in the Plan is entirely
voluntary and participants in the Plan may terminate their participation at any
time. A broker, bank or other nominee may reinvest dividends and make optional
cash payments on behalf of beneficial owners.
A participant in the Plan may obtain additional shares of Common Stock by:
. reinvesting dividends on all or part of the shares of Common Stock held by
the participant.
. making optional cash payments of not less than $50 up to $10,000 per month
whether or not dividends on shares held by the participant are being
reinvested.
. making optional cash payments in excess of $10,000 per month with the
permission of the Company whether or not dividends on shares held by the
participant are being reinvested.
(Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT
PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The date of this Prospectus is March ___, 1996
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(Continued from previous page)
Optional cash payments in excess of $10,000 may be made only pursuant to an
accepted request for waiver. It is expected that a portion of the shares of
Common Stock available for issuance under the Plan will be issued pursuant to
such waivers. Each month, at least three business days prior to the related
record date, the Company will establish the Threshold Price, if any (as defined
in Question 17), applicable to optional cash payments that exceed $10,000. The
price to be paid for shares of Common Stock purchased under the Plan in excess
of $10,000 pursuant to the optional cash payment feature of the Plan will be a
price reflecting a discount of 0% to 5% (the "Waiver Discount") (see Question
17) from the applicable Market Price (as defined in Question 12). There is no
pre-established maximum limit applicable to optional cash payments that may be
made pursuant to accepted requests for waiver. Optional cash payments that do
not exceed $10,000 and the reinvestment of dividends in additional shares of
Common Stock will not be subject to the Waiver Discount or the Threshold Price,
if any. Participants in the Plan may request that any or all of their shares
held in Plan accounts be sold by the Plan Administrator. See Question 27.
To the extent that shares of Common Stock issued hereunder are authorized but
previously unissued shares or treasury shares rather than shares acquired in
the open market, the Plan will raise additional capital for the Company. The
Company currently intends to issue such shares and, therefore, the Plan is
expected to raise capital for the Company. Each month a portion of the shares
available for issuance under the Plan may be purchased by owners of shares
(including brokers or dealers) who, in connection with any resales of such
shares, may be deemed to be underwriters within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"). These sales will be effected
through the Company's ability to waive limits applicable to the amounts which
participants may invest pursuant to the Plan's optional cash payment feature.
From time to time, financial intermediaries, including brokers and dealers,
may engage in positioning transactions in order to benefit from the discount
from market price of the Common Stock acquired through the reinvestment of
dividends under the Plan. Such transactions may cause fluctuations in the
trading volume of the Common Stock. Financial intermediaries which engage in
positioning transactions may be deemed to be underwriters within the meaning of
the Securities Act.
This Prospectus relates to 3,900,000 shares of Common Stock offered hereby
and registered for sale under the Plan. Participants should retain this
Prospectus for future reference.
<PAGE>
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such an offer or solicitation in such
jurisdiction. No person has been authorized to give any information or to make
any representations other than those contained in this Prospectus in connection
with the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that information herein
is correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
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PAGE
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Available Information...................................................... 3
Incorporation of Certain Documents by Reference............................ 3
CWM Mortgage Holdings, Inc................................................. 3
Summary of Plan............................................................ 3
The Plan................................................................... 5
Purpose.................................................................... 5
Options Available to Participants.......................................... 6
Advantages and Disadvantages............................................... 6
Administration............................................................. 7
Participation.............................................................. 8
Purchases and Prices of Shares............................................. 11
Reports to Participants.................................................... 17
Dividends on Fractions..................................................... 17
Certificates for Common Shares............................................. 17
Withdrawals and Termination................................................ 18
Other Information.......................................................... 19
Dividends.................................................................. 23
Use of Proceeds............................................................ 23
Plan of Distribution....................................................... 23
Legal Opinion.............................................................. 24
Experts.................................................................... 24
Indemnification............................................................ 24
Glossary................................................................... 25
Schedule A................................................................. 27
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
concerning the Company can be inspected at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the following regional
offices of the Commission: New York (7 World Trade Center, Suite 1300, New
York, New York 10048), and Chicago (Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511), and copies of such
material can be obtained from the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Reports, proxy statements and other information concerning
the Company also may be inspected at the offices of the New York Stock Exchange
where the Company's Common Stock is listed. This Prospectus does not contain
all information set forth in the Registration Statement and Exhibits thereto
which the Company has filed with the Commission under the Securities Act and to
which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission by
the Company are incorporated by reference in this Prospectus: (1) The Company's
Annual Report on Form 10-K for the year ended December 31, 1994; (2) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995;
(3) the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1995; (4) the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995; and (5) the description of the Common Stock contained in the
Company's registration statement under Section 12 of the Exchange Act and all
amendments and reports filed for the purpose of updating that description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the securities offered hereby shall be
deemed incorporated by reference into this Prospectus and to be a part hereof
from the date of filing such documents.
Any person receiving a copy of this Prospectus may obtain without charge,
upon request, a copy of any of the documents incorporated by reference herein,
except for the exhibits to such documents. Written requests should be addressed
to Investor Relations, CWM Mortgage Holdings, Inc., 155 North Lake Avenue, P.O.
Box 7137, Pasadena, California 91109-7137. Telephone requests may be directed
to Investor Relations at (818) 304-7523.
CWM MORTGAGE HOLDINGS, INC.
The Company is a real estate investment trust which currently operates four
businesses: its principal business, a non-conforming mortgage loan conduit, a
warehouse lending division, a construction lending division and a division that
purchases and securitizes lower credit quality mortgage loans. The Company's
principal executive office is located at 35 North Lake Avenue, Pasadena,
California 91101.
SUMMARY OF PLAN
The Plan provides owners of Common Stock with a convenient and attractive
method of investing cash dividends and optional cash payments in additional
shares of Common Stock at a discount from the Market Price (as defined in
Question 12) and without payment of any brokerage commission or service charge.
The
3
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price to be paid for shares of Common Stock purchased under the Plan will be a
price reflecting a discount of 1% (subject to change) from the Market Price for
the reinvestment of cash dividends, to the extent shares are purchased directly
from the Company, a discount of 3% (subject to change) from the Market Price
for the investment of optional cash payments of up to $10,000, and a discount
of 0% to 5% (the "Waiver Discount") from the Market Price for the investment of
optional cash payments that exceed $10,000. Each of the discounts is subject to
change (but will not vary from the range of 0% to 5%) from time to time or
discontinuance at the Company's discretion after a review of current market
conditions, the level of participation in the Plan and the Company's current
and projected capital needs. Except with respect to the Waiver Discount (see
Question 17), the Company will provide Participants (as defined in Question 2)
with written notice of a change in the applicable discount rate at least thirty
days prior to the relevant record date.
Subject to the availability of shares of Common Stock registered for issuance
under the Plan, there is no minimum or maximum limitation on the amount of
dividends a Participant may reinvest under the Plan. See Question 2.
Participants electing to invest optional cash payments in additional shares
of Common Stock are subject to a minimum per month purchase limit of $50 and a
maximum per month purchase limit of $10,000 (subject to waiver). See Question
17. Optional cash payments in excess of $10,000 may be made only upon
acceptance by the Company of a completed Request for Waiver form from a
Participant. See Question 17. Each month, at least three business days prior to
each record date (as defined in Question 18), the Company will establish the
Waiver Discount and Threshold Price, if any (each as defined in Question 17),
applicable to optional cash payments that exceed $10,000. The Waiver Discount,
which may vary each month, will be established in the Company's sole discretion
after a review of current market conditions, the level of participation in the
Plan and the Company's current and projected capital needs. With respect to
optional cash payments that exceed $10,000 only, for each Trading Day of the
related Pricing Period (each as defined in Question 12) on which the Threshold
Price is not satisfied, one-twelfth of a Participant's optional cash payment
will be returned without interest. Optional cash payments that do not exceed
$10,000 and the reinvestment of dividends in additional shares of Common Stock
will not be subject to the Waiver Discount or Threshold Price, if any. Optional
cash payments of less than $50 and that portion of any optional cash payment
which exceeds the maximum monthly purchase limit of $10,000, unless such limit
has been waived, are subject to return to the Participant without interest.
Participants may request that any or all shares held in the Plan be sold by the
Plan Administrator on behalf of such Participants. See Question 27.
Subject to the availability of shares of Common Stock registered for issuance
under the Plan, there is no total maximum number of shares that can be issued
pursuant to the reinvestment of dividends and no pre-established maximum limit
applies to optional cash payments that may be made pursuant to Requests for
Waiver. As of the date hereof, 3,900,000 shares of Common Stock have been
registered and are available for sale under the Plan.
The Company expects to grant Requests for Waiver to financial intermediaries,
including brokers and dealers, and other Participants in the future. Grants of
Requests for Waiver will be made in the sole discretion of the Company based on
a variety of factors, which may include: the Company's current and projected
capital needs, the alternatives available to the Company to meet those needs,
prevailing market prices for Common Stock, general economic and market
conditions, expected aberrations in the price or trading volume of the Common
Stock, the potential disruption of the price of the Common Stock by a financial
intermediary, the number of shares of Common Stock held by the Participant
submitting the waiver request, the past actions of a Participant under the
Plan, the aggregate amount of optional cash payments for which such waivers
have been submitted and the administrative constraints associated with granting
such waivers. If such
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Requests for Waiver are granted, a portion of the shares available for issuance
under the Plan will be purchased by Participants (including brokers or dealers)
who, in connection with any resales of such shares, may be deemed to be
underwriters within the meaning of the Securities Act. To the extent that
Requests for Waiver are granted, it is expected that a greater number of shares
will be issued under the optional cash payment feature of the Plan as opposed
to the dividend reinvestment feature of the Plan.
Financial intermediaries may purchase a significant portion of the shares of
Common Stock issued pursuant to the optional cash payment feature of the Plan.
The Company does not have any formal or informal understanding with any such
organizations and, therefore, the extent of such financial intermediaries'
participation under the Plan cannot be estimated at this time. Participants
that are financial intermediaries that acquire shares of Common Stock under the
Plan with a view to distribution of such shares or that offer or sell Shares
for the Company in connection with the Plan may be deemed to be underwriters
within the meaning of the Securities Act.
From time to time, financial intermediaries, including brokers and dealers,
may engage in positioning transactions in order to benefit from the discount
from the Market Price of the shares of Common Stock acquired through the
reinvestment of dividends under the Plan. Such transactions may cause
fluctuations in the trading volume of the Common Stock. Financial
intermediaries which engage in positioning transactions may be deemed to be
underwriters within the meaning of the Securities Act. The Plan is intended for
the benefit of investors in the Company and not for individuals or investors
who engage in transactions which may cause aberrations in the price or trading
volume of the Common Stock.
THE PLAN
The Plan was adopted by the Board of Directors of CWM Mortgage Holdings, Inc.
(the "Company") on October 31, 1985 and was significantly amended by the Board
of Directors on March 23, 1992 and May 17, 1995. Additional resolutions
relating to the reservation of additional shares of Common Stock to be issued
pursuant to the Plan were adopted by the Board of Directors on January 16, 1996.
The following questions and answers explain and constitute the Plan.
Shareholders who do not participate in the Plan will receive cash dividends, as
declared, and paid in the usual manner.
PURPOSE
1. What is the purpose of the Plan?
The primary purpose of the Plan is to provide eligible holders of shares of
common stock (the "Common Stock") of the Company with a convenient and simple
method of increasing their investment in the Company by investing cash
dividends in additional shares of Common Stock without payment of any brokerage
commission or service charge and at a discount from the Market Price (as
defined in Question 12) to the extent shares are purchased directly from the
Company, and by investing optional cash payments in additional shares of Common
Stock at a discount from the Market Price and without payment of any brokerage
commission or service charge. See Question 5 for a description of the holders
who are eligible to participate in the Plan. The Plan may also be used by the
Company to raise additional capital through the sale each month of a portion of
the shares available for issuance under the Plan to owners of shares (including
brokers or dealers) who, in connection with any resales of such shares, may be
deemed to be underwriters. These sales will be effected through the Company's
ability to waive limitations applicable to the amounts which Participants (as
defined in Question 2) may invest pursuant to the Plan's optional cash payment
feature.
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See Question 17 for information concerning limitations applicable to optional
cash payments and certain of the factors considered by the Company in granting
waivers. To the extent shares are purchased from the Company under the Plan, it
will receive additional funds for general corporate purposes. The Plan is
intended for the benefit of investors in the Company and not for individuals or
investors who engage in transactions which may cause aberrations in the price
or trading volume of Common Stock. From time to time, financial intermediaries
may engage in positioning transactions in order to benefit from the discount
from the Market Price of the shares of Common Stock acquired through the
reinvestment of dividends under the Plan. Such transactions may cause
fluctuations in the trading volume of the Common Stock. The Company reserves
the right to modify, suspend or terminate participation in the Plan by
otherwise eligible holders of Common Stock in order to eliminate practices
which are not consistent with the purposes of the Plan.
OPTIONS AVAILABLE TO PARTICIPANTS
2. What options are available to enrolled Participants?
Eligible holders of Common Stock who wish to participate in the Plan (each a
"Participant") may elect to have cash dividends paid on all or a portion of
their shares of Common Stock automatically reinvested in additional shares of
Common Stock. Cash dividends are paid on the Common Stock when and as declared
by the Company's Board of Directors. Subject to the availability of shares of
Common Stock registered for issuance under the Plan, there is no minimum
limitation on the amount of dividends a Participant may reinvest under the
dividend reinvestment feature of the Plan.
Each month, Participants may also elect to invest optional cash payments in
additional shares of Common Stock, subject to a minimum per month purchase
limit of $50 and a maximum per month purchase limit of $10,000, subject to
waiver. See Question 17 for information concerning limitations applicable to
optional cash payments and the availability of waivers with respect to such
limitations. Participants may make optional cash payments each month even if
dividends on their shares of Common Stock are not being reinvested and whether
or not a dividend has been declared.
ADVANTAGES AND DISADVANTAGES
3. What are the advantages and disadvantages of the Plan?
Advantages:
(a) The Plan provides Participants with the opportunity to reinvest cash
dividends paid on all or a portion of their shares of Common Stock in
additional shares of Common Stock without payment of any brokerage
commission or service charge and at a 1% discount from the Market Price
(subject to change), to the extent shares are purchased directly from the
Company.
(b) The Plan provides Participants with the opportunity to make monthly
investments of optional cash payments, subject to minimum and maximum
amounts, for the purchase of additional shares of Common Stock at a 3%
discount from the Market Price (subject to change) and without payment of
any brokerage commission or service charge.
(c) Subject to the availability of shares of Common Stock registered for
issuance under the Plan, all cash dividends paid on Participants' shares
can be fully invested in additional shares of Common Stock because the Plan
permits fractional shares to be credited to Plan accounts. Dividends on
such fractional shares, as well as on whole shares, will also be reinvested
in additional shares which will be credited to Plan accounts.
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(d) The Plan Administrator, at no charge to Participants, provides for
the safekeeping of stock certificates for shares credited to each Plan
account.
(e) Periodic statements reflecting all current activity, including share
purchases and latest Plan account balance, simplify Participants' record
keeping. See Question 22 for information concerning reports to
Participants.
Disadvantages:
(a) No interest will be paid by the Company or the Plan Administrator on
dividends or optional cash payments held pending reinvestment or
investment. See Question 11. In addition, optional cash payments in excess
of $10,000 may be subject to return to the Participant without interest in
the event that the Threshold Price, if any, is not met for any Trading Day
during the related Pricing Period. See Question 17.
(b) With respect to optional cash payments, the actual number of shares
to be issued to a Participant's Plan account will not be determined until
after the end of the relevant Pricing Period. Therefore, during the Pricing
Period Participants will not know the actual number of shares they have
purchased.
(c) With respect to optional cash payments, while the Plan currently
provides for a 3% discount from the Market Price (subject to change) during
the Pricing Period, the Market Price, as so discounted, may exceed the
price at which shares of the Common Stock are trading on the Investment
Date when the shares are issued or thereafter.
(d) Because optional cash payments must be received by the Plan
Administrator prior to the related Pricing Period, such payments may be
exposed to changes in market conditions for a longer period of time than in
the case of typical secondary market transactions. In addition, optional
cash payments once received by the Plan Administrator will not be returned
to Participants unless a written request is directed to the Plan
Administrator at least five business days prior to the record date for the
Investment Date with respect to which optional cash payments have been
delivered by such Participant. See Questions 18 and 20.
(e) Resales of shares of Common Stock credited to a Participant's account
under the Plan will involve a nominal fee per transaction paid to the Plan
Administrator (if such resale is made by the Plan Administrator at the
request of a Participant), a brokerage commission and any applicable stock
transfer taxes on the resales. See Questions 21 and 27.
ADMINISTRATION
4. Who administers the Plan?
The Company has retained The Bank of New York as plan administrator (the
"Plan Administrator"), to administer the Plan, keep records, send statements of
account activity to each Participant and perform other duties relating to the
Plan. See Question 22 for information concerning reports to Participants.
Shares purchased under the Plan and held by the Plan Administrator will be
registered in the Plan Administrator's name or the name of its nominee for the
benefit of the Participants. In the event that the Plan Administrator resigns
or otherwise ceases to act as plan administrator, the Company will appoint a
new plan administrator to administer the Plan.
The Plan Administrator also acts as dividend disbursing agent, transfer agent
and registrar for the Company's Common Stock and the trustee for securities
issued by CWMBS, Inc. in which an affiliate of the Company has an interest.
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PARTICIPATION
For purposes of this section, responses will generally be based upon the
method by which the shareholder holds his or her shares of Common Stock.
Generally, shareholders are either Record Owners or Beneficial Owners. A Record
Owner is a shareholder who owns shares of Common Stock in his or her own name.
A Beneficial Owner is a shareholder who beneficially owns shares of Common
Stock that are registered in a name other than his or her own name (for
example, the shares are held in the name of a broker, bank or other nominee). A
Record Owner may participate directly in the Plan, whereas a Beneficial Owner
will have to either become a Record Owner by having one or more shares
transferred into his or her own name or coordinate his or her participation in
the Plan through the broker, bank or other nominee in whose name the Beneficial
Owner's shares are held. If a Beneficial Owner who desires to become a
Participant encounters any difficulties in coordinating his or her
participation in the Plan with his or her broker, bank or other nominee, he or
she should call the Company's Investor Relations department at (818) 304-7523.
5. Who is eligible to participate?
All Record Owners or Beneficial Owners of at least one share of Common Stock
are eligible to participate in the Plan. A Record Owner may participate
directly in the Plan. A Beneficial Owner must either become a Record Owner by
having one or more shares transferred into his or her own name or arrange with
the broker, bank or other nominee who is the record holder to participate on
his or her behalf. See Question 6.
To facilitate participation by Beneficial Owners, the Company has made
arrangements with the Plan Administrator to reinvest dividends, on a per
dividend basis, and accept optional cash payments under the Plan by record
holders such as brokers, banks and other nominees, on behalf of beneficial
owners. See Question 6.
The Company may terminate, by written notice, at any time any Participant's
individual participation in the Plan if such participation would be in
violation of the restrictions contained in the Certificate of Incorporation or
Bylaws of the Company. Such restrictions prohibit any person or group of
persons from acquiring or holding, directly or indirectly, ownership of a
number of shares of capital stock of the Company in excess of 9.8% of the
outstanding shares. The meanings ascribed to the terms "group" and "ownership"
may cause a person who individually owns less than 9.8% of the shares
outstanding to be deemed to be holding shares in excess of the foregoing
limitation. The Certificate of Incorporation provides that in the event a
person acquires shares of capital stock in excess of the foregoing limitation,
the excess shares are deemed tendered for purchase to the Company at a price
calculated pursuant to a formula set forth in the Certificate of Incorporation.
Under the Certificate of Incorporation any acquisition of shares of the Company
that would result in the disqualification of the Company as a real estate
investment trust for tax purposes is void to the fullest extent permitted by
law. Additionally, the Company's Certificate of Incorporation and Bylaws
provide that certain "disqualified organizations," which generally include
governmental entities and other tax-exempt persons not subject to tax on
unrelated business taxable income, are ineligible to hold the Company's shares.
6. How does an eligible shareholder participate?
Record Owners may join the Plan by completing and signing the Authorization
Form included with the Plan and returning it to the Plan Administrator. A
postage-paid envelope is provided for this purpose. Authorization Forms may be
obtained at any time by written request to The Bank of New York, Dividend
Reinvestment, P.O. Box 1958, Newark, New Jersey 07101-9774, or by telephoning
the Plan Administrator at (800) 524-4458.
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Beneficial Owners who wish to join the Plan must instruct their broker, bank
or other nominee to complete and sign the Authorization Form. The broker, bank
or other nominee will forward the completed Authorization Form to its securities
depository and the securities depository will provide the Plan Administrator
with the information necessary to allow the Beneficial Owner to participate in
the Plan. See Question 8 for a discussion of the Broker and Nominee form (the
"B&N Form"), which is required to be used for optional cash payments of a
Beneficial Owner whose broker, bank or other nominee holds the Beneficial
Owner's shares in the name of a major securities depository. See also Question
16.
If a Record Owner or the broker, bank or other nominee on behalf of a
Beneficial Owner submits a properly executed Authorization Form without electing
an investment option, such Authorization Form will be deemed to indicate the
intention of such Record Owner or Beneficial Owner, as the case may be, to apply
all cash dividends and optional cash payments, if applicable, toward the
purchase of additional shares of Common Stock. See Question 7 for investment
options.
7. What does the Authorization Form provide?
The Authorization Form appoints the Plan Administrator as agent for the
Participant and directs the Company to pay to the Plan Administrator each
Participant's cash dividends on all or a specified number of shares of Common
Stock owned by the Participant on the applicable record date ("Participating
Shares"), as well as on all whole and fractional shares of Common Stock
credited to a Participant's Plan account ("Plan Shares"). The Authorization
Form directs the Plan Administrator to purchase on the Investment Date (as
defined in Question 11) additional shares of Common Stock with such dividends
and optional cash payments, if any, made by the Participant. See Question 8 for
a discussion of the B&N Form which is required to be used for optional cash
payments of a Beneficial Owner whose broker, bank or other nominee holds the
Beneficial Owner's shares in the name of a major securities depository. The
Authorization Form also directs the Plan Administrator to reinvest
automatically all subsequent dividends on Plan Shares. Dividends will continue
to be reinvested on the number of Participating Shares and on all Plan Shares
until the Participant specifies otherwise by contacting the Plan Administrator,
withdraws from the Plan (see Questions 26 and 27), or the Plan is terminated.
See Question 6 for additional information about the Authorization Form.
The Authorization Form provides for the purchase of additional shares of
Common Stock through the following investment options:
(1) If "Full Dividend Reinvestment" is elected, the Plan Administrator will
apply all cash dividends on all shares of Common Stock then or
subsequently registered in the Participant's name, and all cash
dividends on all Plan Shares, together with any optional cash payments,
toward the purchase of additional shares of Common Stock.
(2) If "Partial Dividend Reinvestment" is elected, the Plan Administrator
will apply all cash dividends on only the number of Participating
Shares registered in the Participant's name and specified on the
Authorization Form and all cash dividends on all Plan Shares, together
with any optional cash payments, toward the purchase of additional
shares of Common Stock.
(3) If "Optional Cash Payments Only" is elected, the Participant will
continue to receive cash dividends on shares of Common Stock registered
in that Participant's name in the usual manner. However, the Plan
Administrator will apply all cash dividends on all Plan Shares,
together with any optional cash payments received from the Participant,
toward the purchase of additional shares of Common Stock. See Question
8 for a discussion of the B&N Form which is required to be used for
optional cash payments of a Beneficial Owner whose broker, bank or
other nominee holds the Beneficial Owner's shares in the name of a
major securities depository.
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Each Participant may select any one of these three options. In each case,
dividends will be reinvested on all Participating Shares and on all Plan Shares
held in the Plan account, including dividends on shares of Common Stock
purchased with any optional cash payments, until a Participant specifies
otherwise by contacting the Plan Administrator, or withdraws from the Plan
altogether (see Questions 26 and 27), or until the Plan is terminated. If a
Participant would prefer to receive cash payments of dividends paid on Plan
Shares rather than reinvest such dividends, those shares must be withdrawn from
the Plan by written notification to the Plan Administrator. See Questions 26
and 27 regarding withdrawal of Plan Shares.
Participants may change their investment options at any time by requesting a
new Authorization Form and returning it to the Plan Administrator at the
address set forth in Question 37. See Question 11 for the effective date for
any change in investment options.
8. What does the B&N Form provide?
The B&N Form provides the only means by which a broker, bank or other nominee
holding shares of a Beneficial Owner in the name of a major securities
depository may invest optional cash payments on behalf of such Beneficial
Owner. A B&N Form must be delivered to the Plan Administrator each time that
such broker, bank or other nominee transmits optional cash payments on behalf
of a Beneficial Owner. B&N Forms will be furnished at any time upon request to
the Plan Administrator at the address or telephone number specified in Question
37.
Prior to submitting the B&N Form, the broker, bank or other nominee for a
Beneficial Owner must submit a completed Authorization Form on behalf of the
Beneficial Owner. See Questions 6 and 7.
THE B & N FORM AND APPROPRIATE INSTRUCTIONS MUST BE RECEIVED BY THE PLAN
ADMINISTRATOR NOT LATER THAN THE APPLICABLE RECORD DATE OR THE OPTIONAL CASH
PAYMENT WILL NOT BE INVESTED UNTIL THE FOLLOWING INVESTMENT DATE.
9. Is partial participation possible under the Plan?
Yes. Record Owners or the broker, bank or other nominee for Beneficial Owners
may designate on the Authorization Form a number of shares for which dividends
are to be reinvested. Dividends will thereafter be reinvested only on the
number of shares specified, and the Record Owner or Beneficial Owner, as the
case may be, will continue to receive cash dividends on the remainder of the
shares.
10. When may an eligible shareholder join the Plan?
A Record Owner or a Beneficial Owner may join the Plan at any time. Once in
the Plan, a Participant remains in the Plan until he or she withdraws from the
Plan, the Company terminates his or her participation in the Plan or the
Company terminates the Plan. See Question 27 regarding withdrawal from the
Plan.
11. When will dividends be reinvested and/or optional cash payments be
invested?
When shares are purchased from the Company, such purchases will be made on
the "Investment Date" in each month. The Investment Date with respect to Common
Stock acquired directly from the Company and relating to a dividend
reinvestment will be the dividend payment date declared by the Board of
Directors (unless such date is not a business day in which case it is the first
business day immediately thereafter) or, in the case of open market purchases,
no later than ten business days following the dividend payment date. The
Investment Date with respect to Common Stock acquired directly from the Company
and relating to an optional cash payment will generally be on or about the
twenty-second day of each month or, in the case of open market purchases, no
later than the last business day of each month. In no event, however, will the
Investment Date relating to dividend reinvestments be less than ten days from
the Investment Date relating to optional cash payments.
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When open market purchases are made by the Plan Administrator, such purchases
may be made on any securities exchange where the shares are traded, in the
over-the-counter market or by negotiated transactions, and may be subject to
such terms with respect to price, delivery and other matters as agreed to by
the Plan Administrator. Neither the Company nor any Participant shall have any
authorization or power to direct the time or price at which shares will be
purchased or the selection of the broker or dealer through or from whom
purchases are to be made by the Plan Administrator. However, when open market
purchases are made by the Plan Administrator, the Plan Administrator shall use
its best efforts to purchase the shares at the lowest possible price.
If the Authorization Form is received prior to the record date for a dividend
payment, the election to reinvest dividends will begin with that dividend
payment. If the Authorization Form is received on or after any such record
date, reinvestment of dividends will begin on the dividend payment date
following the next record date if the Participant is still a Shareholder of
record. Record dates for payment of dividends normally precede payment dates by
approximately five weeks.
See Question 17 for information concerning limitations on the minimum and
maximum amounts of optional cash payments that may be made each month and
Question 18 for information as to when optional cash payments must be received
to be invested on each Investment Date.
Shares will be allocated and credited to Participants' accounts as follows:
(1) shares purchased from the Company will be allocated and credited on the
appropriate Investment Date; and (2) shares purchased in market transactions
will be allocated and credited as of the date on which the Plan Administrator
completes the purchases of the aggregate number of shares to be purchased on
behalf of all Participants with dividends to be reinvested or optional cash
payments, as the case may be, during the month.
NO INTEREST WILL BE PAID ON CASH DIVIDENDS OR OPTIONAL CASH PAYMENTS PENDING
INVESTMENT OR REINVESTMENT UNDER THE TERMS OF THE PLAN. SINCE NO INTEREST IS
PAID ON CASH HELD BY THE PLAN ADMINISTRATOR, IT NORMALLY WILL BE IN THE BEST
INTEREST OF A PARTICIPANT TO DEFER OPTIONAL CASH PAYMENTS UNTIL SHORTLY BEFORE
COMMENCEMENT OF THE PRICING PERIOD.
PURCHASES AND PRICES OF SHARES
12. What will be the price to Participants of shares purchased under the Plan?
With respect to reinvested dividends, the price per share of Common Stock
acquired directly from the Company will be 99% (subject to change) of the
average of the high and low sales prices, computed to four decimal places, of
the Common Stock on the NYSE on the Investment Date (as defined in Question
11), or if no trading occurs in the Common Stock on the Investment Date, the
average of the high and low sales prices for the first trading day immediately
preceding the Investment Date for which trades are reported.
No discount will be available for dividends reinvested in Common Stock
acquired in open market purchases. See Question 15. The price per share of
Common Stock acquired through open market purchases with reinvested dividends
will be the weighted average of the actual prices paid, computed to four
decimal places, for all of the Common Stock purchased by the Plan Administrator
with all Participants' reinvested dividends for the related quarter.
Additionally, each Participant will be charged a pro rata portion of any
brokerage commissions or other fees or charges paid by the Plan Administrator
in connection with such open market purchases. (If a Participant desires to opt
out of the dividend reinvestment feature of the Plan when the Common Stock
relating to dividend reinvestments will be purchased in the open market, a
Participant
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must notify the Plan Administrator no later than the record date for the
related dividend payment date. For information as to the source of the Common
Stock to be purchased under the Plan see Question 15.)
With respect to optional cash payments that do not exceed $10,000 (see
Question 17 for a discussion of the discount applicable to optional cash
payments in excess of $10,000), the price per share of Common Stock acquired
directly from the Company will be 97% (subject to change) of the average of the
daily high and low sale prices, computed to four decimal places, of the Common
Stock as reported on the NYSE for the twelve Trading Days immediately preceding
the relevant Investment Date (as defined in Question 11 above) or, if no
trading occurs in the Common Stock on one or more of such Trading Days, for the
twelve Trading Days immediately preceding the Investment Date for which trades
are reported. A "Trading Day" means a day on which trades in the Common Stock
are reported on the NYSE. With respect to all optional cash payments,
regardless of the amount being invested, the period encompassing the twelve
Trading Days which relate to an Investment Date constitutes the relevant
"Pricing Period".
The price per share of Common Stock acquired through open market purchases
with optional cash payments will be 97% (subject to change) of the weighted
average of the actual prices paid, computed to four decimal places, for all of
the Common Stock purchased by the Plan Administrator with all Participants'
optional cash payments for the related month.
The price per share of Common Stock purchased with dividends reinvested in
Common Stock acquired directly from the Company and all optional cash payments,
currently reflects a discount which is subject to change (but will not vary
from the range of 0% to 5%) from time to time or discontinuance at the
Company's discretion after a review of current market conditions, the level of
participation in the Plan and the Company's current and projected capital
needs. Except with respect to the Waiver Discount (see Question 17), the
Company will provide Participants with written notice of a change in the
applicable discount rate at least thirty days prior to the relevant record
date.
Neither the Company nor any Participant shall have any authorization or power
to direct the time or price at which shares will be purchased or the selection
of the broker or dealer through or from whom purchases are to be made by the
Plan Administrator. However, when open market purchases are made by the Plan
Administrator, the Plan Administrator shall use its best efforts to purchase
the shares at the lowest possible price.
All references in the Plan to the "Market Price" when it relates to dividend
reinvestments which will be reinvested in Common Stock acquired directly from
the Company shall mean the average of the high and low sales prices, computed
to four decimal places, of the Common Stock on the NYSE on the Investment
Date, or if no trading occurs in the Common Stock on the Investment Date, the
average of the high and low sales prices for the first trading day immediately
preceding the Investment Date for which trades are reported. With respect to
dividend reinvestments which will be reinvested in Common Stock purchased in
the open market, "Market Price" shall mean the weighted average of the actual
prices paid, computed to four decimal places, for all of the Common Stock
purchased by the Plan Administrator with all Participants' reinvested dividends
for the related quarter. All references in the Plan to the "Market Price" for
optional cash payments which will be invested in Common Stock acquired directly
from the Company shall mean the average of the daily high and low sales prices
of the Common Stock as reported on the NYSE during the Pricing Period (as
defined above). With respect to optional cash payments which will be reinvested
in Common Stock purchased in the open market, "Market Price" shall mean the
weighted average of the actual prices paid, computed to four decimal places,
for all of the Common Stock purchased by the Plan Administrator with all
Participants' optional cash payments for the related month.
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13. What are the Record Dates and Investment Dates for dividend reinvestment?
For the reinvestment of dividends, the "Record Date" is the record date
declared by the Board of Directors for such dividend. Likewise, the dividend
payment date declared by the Board of Directors constitutes the Investment Date
applicable to the reinvestment of such dividend with respect to Common Stock
acquired directly from the Company, except that if any such date is not a
business day, the first business day immediately following such date shall be
the Investment Date. The Investment Date with respect to Common Stock purchased
in open market transactions will be no later than ten business days following
the dividend payment date. Dividends will be reinvested on the Investment Date
using the applicable Market Price (as defined in Question 12). Generally,
record dates for quarterly dividends on the Common Stock will precede the
dividend payment dates by approximately five weeks. See Schedule A for a list
of the future dividend record dates and payment dates. Please refer to Question
18 for a discussion of the Record Dates and Investment Dates applicable to
optional cash payments.
14. How will the number of shares purchased for a Participant be determined?
A Participant's account in the Plan will be credited with the number of
shares, including fractions computed to four decimal places, equal to the
total amount to be invested on behalf of such Participant divided by the
purchase price per share as calculated pursuant to the methods described in
Question 12, as applicable. The total amount to be invested will depend on the
amount of any dividends paid on the number of Participating Shares and Plan
Shares in such Participant's Plan account and available for investment on the
related Investment Date, or the amount of any optional cash payments made by
such Participant and available for investment on the related Investment Date.
Subject to the availability of shares of Common Stock registered for issuance
under the Plan, there is no total maximum number of shares available for
issuance pursuant to the reinvestment of dividends.
15. What is the source of Common Stock purchased under the Plan?
Plan Shares will be purchased either directly from the Company, in which
event such shares will be either authorized but unissued shares or shares held
in the treasury, or on the open market, or by a combination of the foregoing,
at the option of the Company, after a review of current market conditions and
the Company's current and projected capital needs. The Company will determine
the source of the Common Stock to be purchased under the Plan at least three
business days prior to the relevant Record Date, and will notify the Plan
Administrator of the same. Neither the Company nor the Plan Administrator shall
be required to provide any written notice to Participants as to the source of
the Common Stock to be purchased under the Plan, but current information
regarding the source of the Common Stock may be obtained by contacting the
Company's Treasurer at (800) 669-2300.
16. How does the optional cash payment feature of the Plan work?
All Record Holders who have timely submitted signed Authorization Forms
indicating their intention to participate in this feature of the Plan, and all
Beneficial Owners whose brokers, banks or other nominees have timely submitted
signed Authorization Forms indicating their intention to participate in this
feature of the Plan (except for Beneficial Owners whose brokers, banks or other
nominees hold the shares of the Beneficial Owners in the name of a major
securities depository), are eligible to make optional cash payments during any
month, whether or not a dividend is declared. If a broker, bank or other
nominee holds shares of a Beneficial Owner in the name of a major securities
depository, optional cash payments must be made through the use of the B&N
Form. See Question 8. Optional cash payments must be accompanied by an
Authorization Form or a B&N Form, as applicable. Each month the Plan
Administrator will apply any
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optional cash payment received from a Participant no later than one business
day prior to the commencement of that month's Pricing Period (as defined in
Question 12) to the purchase of additional shares of Common Stock for the
account of the Participant on the following Investment Date (as defined in
Question 11).
The discount from the Market Price applicable to optional cash payments will
be 3% (subject to change) of the Market Price (as defined in Question 12).
Refer to Question 17 for a discussion of the possible limitations on the
purchase price applicable to the purchase of shares made with optional cash
payments.
17. What limitations apply to optional cash payments?
Each optional cash payment is subject to a minimum per month purchase limit
of $50 and a maximum per month purchase limit of $10,000. For purposes of these
limitations, all Plan accounts under the common control or management of a
Participant will be aggregated. Generally, optional cash payments of less than
$50 and that portion of any optional cash payment which exceeds the maximum
monthly purchase limit of $10,000, unless such limit has been waived by the
Company, will be returned to Participants without interest at the end of the
relevant Pricing Period.
Participants may make optional cash payments of up to $10,000 each month
without the prior approval of the Company. Optional cash payments in excess of
$10,000 may be made by a Participant only upon acceptance by the Company of a
completed Request for Waiver form from such Participant. There is no pre-
established maximum limit applicable to optional cash payments that may be made
pursuant to accepted Requests for Waiver. A Request for Waiver form must be
received and accepted by the Company each month no later than the Record Date
(as defined in Question 18) for the applicable Investment Date. Request for
Waiver forms will be furnished at any time upon request to the Plan
Administrator at the address or telephone number specified in Question 37.
Participants interested in obtaining further information about a Request for
Waiver should contact the Company's Treasurer at (800) 669-2300.
Waivers will be considered on the basis of a variety of factors, which may
include the Company's current and projected capital needs, the alternatives
available to the Company to meet those needs, prevailing market prices for
Common Stock and other Company securities, general economic and market
conditions, expected aberrations in the price or trading volume of the Common
Stock, the potential disruption of the price of the Common Stock by a financial
intermediary, the number of shares of Common Stock held by the Participant
submitting the waiver request, the past actions of a Participant under the
Plan, the aggregate amount of optional cash payments for which such waivers
have been submitted and the administrative constraints associated with granting
such waivers. Grants of waivers will be made in the absolute discretion of the
Company.
PARTICIPANTS IN THE PLAN ARE NOT OBLIGATED TO PARTICIPATE IN THE OPTIONAL
CASH PAYMENT FEATURE OF THE PLAN AT ANY TIME. OPTIONAL CASH PAYMENTS NEED NOT
BE IN THE SAME AMOUNT EACH MONTH.
Unless it waives its right to do so, the Company may establish for any
Pricing Period a minimum price (the "Threshold Price") applicable only to the
investment of optional cash payments that exceed $10,000 and that are made
pursuant to Requests for Waiver, in order to provide the Company with the
ability to set a minimum price at which Common Stock will be sold under the
Plan each month pursuant to such requests. A Threshold Price will only be
established when shares of Common Stock will be purchased directly from the
Company on the applicable Investment Date. The Company will, at least three
business days prior to each Record Date (as defined in Question 18), determine
whether to establish a Threshold Price and, if a Threshold Price is
established, its amount and so notify the Plan Administrator. The determination
whether to establish a Threshold Price and, if a Threshold Price is
established, its amount will be made by the
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Company at its discretion after a review of current market conditions, the
level of participation in the Plan and the Company's current and projected
capital needs. Neither the Company nor the Plan Administrator shall be required
to provide any written notice to Participants as to whether a Threshold Price
has been established for any Pricing Period, but current information regarding
the Threshold Price may be obtained by contacting the Company's Treasurer at
(800) 669-2300.
The Threshold Price for optional cash payments made pursuant to Requests for
Waiver, if established for any Pricing Period, will be a stated dollar amount
that the average of the high and low sale prices of the Common Stock on the
NYSE for each Trading Day of the relevant Pricing Period must equal or exceed.
In the event that the Threshold Price is not satisfied for a Trading Day in the
Pricing Period, then that Trading Day and the trading prices for that day will
be excluded from that Pricing Period. Thus, for example, if the Threshold Price
is not satisfied for three of the twelve Trading Days in a Pricing Period, then
the average sales price for purchases and the amount of optional cash payments
which may be invested will be based upon the remaining nine Trading Days when
the Threshold Price is satisfied. For each Trading Day on which the Threshold
Price is not satisfied, 1/12 of each optional cash payment made by a
Participant pursuant to a Request for Waiver will be returned to such
Participant, without interest, as soon as practicable after the applicable
Investment Date. In the example above, therefore, 3/12 of each Participant's
optional cash payment made pursuant to a Request for Waiver will be returned to
such Participant by check, without interest, as soon as practicable after the
applicable Investment Date. This return procedure will only apply when shares
are purchased directly from the Company for optional cash payments made
pursuant to Requests for Waiver and the Company has set a Threshold Price with
respect to the relevant Pricing Period. See Question 15.
Setting a Threshold Price for a Pricing Period shall not affect the setting
of a Threshold Price for any subsequent Pricing Period. The Threshold Price
concept and return procedure discussed above apply only to optional cash
payments made pursuant to Requests for Waiver.
For any Investment Date, the Company may waive its right to set a Threshold
Price for optional cash payments made pursuant to Requests for Waiver.
Participants may ascertain whether the Threshold Price applicable to a given
Pricing Period has been set or waived, as applicable, by contacting the
Company's Treasurer at (800) 669-2300.
For a list of expected dates by which the Threshold Price will be set in 1996
and 1997, see Schedule A.
Each month, at least three business days prior to the applicable Record Date
(as defined in Question 18), the Company will establish the discount from the
Market Price applicable to optional cash payments made pursuant to Requests for
Waiver and will notify the Plan Administrator of the same. Such discount (the
"Waiver Discount") will be between 0% and 5% of the Market Price and may vary
each month, but once established will apply uniformly to all optional cash
payments made pursuant to Requests for Waiver during that month. The Waiver
Discount will be established in the Company's sole discretion after a review of
current market conditions, the level of participation in the Plan, and the
Company's current and projected capital needs. The Waiver Discount applies only
to optional cash payments made pursuant to Requests for Waiver. Neither the
Company nor the Plan Administrator shall be required to provide any written
notice to Participants as to the Waiver Discount, but current information
regarding the Waiver Discount applicable to the next Pricing Period may be
obtained by contacting the Company's Treasurer at (800) 669-2300. Setting a
Waiver Discount for an Investment Date shall not affect the setting of a Waiver
Discount for any subsequent Investment Date. The Waiver Discount feature
discussed above applies only to optional cash payments made pursuant to Requests
for Waiver and does not apply to the reinvestment of dividends.
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THE THRESHOLD PRICE CONCEPT AND RETURN PROCEDURE DISCUSSED ABOVE APPLY ONLY
TO OPTIONAL CASH PAYMENTS MADE PURSUANT TO REQUESTS FOR WAIVER WHEN SHARES OF
COMMON STOCK ARE TO BE PURCHASED FROM THE COMPANY ON THE APPLICABLE INVESTMENT
DATE. ONLY SUCH OPTIONAL CASH PAYMENTS WILL BE AFFECTED BY THE WAIVER
DISCOUNT. ALL OTHER OPTIONAL CASH PAYMENTS WILL BE MADE AT A 3% DISCOUNT FROM
THE MARKET PRICE (SUBJECT TO CHANGE), WITHOUT REGARD TO ANY THRESHOLD PRICE OR
WAIVER DISCOUNT.
18. What are the Record Dates and Investment Dates for optional cash payments?
Optional cash payments will be invested every month on the related
Investment Date. The "Record Date" for optional cash payments is two business
days prior to the commencement of the related Pricing Period and the
"Investment Date" is generally on or about the twenty-second day of each month
or, in the case of open market purchases, no later than the last business day
of each month. In no event, however, will the Investment Date relating to
optional cash payments be less than ten days from the Investment Date relating
to dividend reinvestments.
Optional cash payments received by the Plan Administrator at least one
business day prior to the commencement of a Pricing Period will be applied to
the purchase of shares of Common Stock on the Investment Date which relates to
that Pricing Period. No interest will be paid by the Company or the Plan
Administrator on optional cash payments held pending investment. Generally,
optional cash payments received on or after the commencement of a Pricing
Period will be returned to Participants without interest at the end of the
Pricing Period; such optional cash payments may be resubmitted by a
Participant prior to the commencement of the next or a later Pricing Period.
For a schedule of expected Record Dates and Investment Dates in 1996 and 1997,
see Schedule A.
19. When must optional cash payments be received by the Plan Administrator?
Each month the Plan Administrator will apply any optional cash payment for
which good funds are timely received to the purchase of shares of Common Stock
for the account of the Participant on the next Investment Date. See Question
18. In order for funds to be invested on the next Investment Date, the Plan
Administrator must have received a check, money order or wire transfer by the
end of the business day immediately preceding the first Trading Day of the
ensuing Pricing Period and such check, money order or wire transfer must have
cleared on or before the related Investment Date. Wire transfers may be used
only if approved verbally in advance by the Plan Administrator. Checks and money
orders are accepted subject to timely collection as good funds and verification
of compliance with the terms of the Plan. Checks or money orders should be made
payable to The Bank of New York--CWM Mortgage Holdings, Inc. DRIP. Checks
returned for any reason will not be resubmitted for collection.
NO INTEREST WILL BE PAID BY THE COMPANY OR THE PLAN ADMINISTRATOR ON
OPTIONAL CASH PAYMENTS HELD PENDING INVESTMENT. SINCE NO INTEREST IS PAID ON
CASH HELD BY THE PLAN ADMINISTRATOR, IT NORMALLY WILL BE IN THE BEST INTEREST
OF A PARTICIPANT TO DEFER OPTIONAL CASH PAYMENTS UNTIL SHORTLY BEFORE
COMMENCEMENT OF THE PRICING PERIOD.
In order for payments to be invested on the Investment Date, in addition to
the receipt of good funds by the end of the business day immediately preceding
the commencement of a Pricing Period, the Plan Administrator must be in receipt
of an Authorization Form or a B&N Form, as appropriate, as of the same date. See
Questions 6 and 8.
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20. May optional cash payments be returned?
Upon telephone or written request to the Plan Administrator received at least
five business days prior to the Record Date for the Investment Date with
respect to which optional cash payments have been delivered to the Plan
Administrator, such optional cash payments will be returned to the Participant
as soon as practicable. Requests received less than five business days prior to
such date will not be returned but instead will be invested on the next related
Investment Date. Additionally, a portion of each optional cash payment will be
returned by check, without interest, as soon as practicable after the
Investment Date for each Trading Day of the Pricing Period that does not meet
the Threshold Price, if any, applicable to optional cash payments made pursuant
to Requests for Waiver. See Question 17. Also, each optional cash payment, to
the extent that it does not either conform to the limitations described in
Question 18 or clear within the time limit described in Question 19, will be
subject to return to the Participant as soon as practicable.
21. Are there any expenses to Participants in connection with their
participation under the Plan?
Participants will have to pay brokerage fees or commissions on shares of
Common Stock purchased with reinvested dividends on the open market, which sums
are not expected to exceed $ .15 per share (subject to change) and which will
be first deducted before determining the number of shares to be purchased. The
Plan Administrator may effect open market purchases and sales of shares for the
Plan through BNY Brokerage Inc., an affiliated broker-dealer, in which case BNY
Brokerage Inc. will receive a commission for effecting such transactions.
Participants will incur no brokerage commissions or service charges in
connection with the reinvestment of dividends when shares of Common Stock are
acquired directly from the Company and in connection with all purchases made
pursuant to optional cash payments under the Plan. The Company will pay all
other costs of administration of the Plan. However, Participants that request
that the Plan Administrator sell all or any portion of their shares (see
Question 27) must pay a nominal fee per transaction to the Plan Administrator,
any related brokerage commissions and applicable stock transfer taxes.
REPORTS TO PARTICIPANTS
22. What kind of reports will be sent to Participants in the Plan?
Each Participant in the Plan will receive a statement of his or her account
following each purchase of additional shares. These statements are
Participants' continuing record of the cost of their purchases and should be
retained for income tax purposes. In addition, Participants will receive copies
of other communications sent to holders of the Common Stock, including the
Company's annual report to its shareholders, the notice of annual meeting and
proxy statement in connection with its annual meeting of shareholders and
Internal Revenue Service information for reporting dividends paid.
DIVIDENDS ON FRACTIONS
23. Will Participants be credited with dividends on fractions of shares?
Yes.
CERTIFICATES FOR COMMON SHARES
24. Will certificates be issued for shares purchased?
No. Common Stock purchased for Participants will be held in the name of the
Plan Administrator or its nominee. No certificates will be issued to
Participants for shares in the Plan unless a Participant submits a written
request to the Plan Administrator or until participation in the Plan is
terminated. At any time, a Participant may request the Plan Administrator to
send a certificate for some or all of the whole shares
17
<PAGE>
credited to a Participant's account. This request should be mailed to the Plan
Administrator at the address set forth in the answer to Question 37. Any
remaining whole shares and any fractions of shares will remain credited to the
Plan account. Certificates for fractional shares will not be issued under any
circumstances.
25. In whose name will certificates be registered when issued?
Each Plan account is maintained in the name in which the related
Participant's certificates were registered at the time of enrollment in the
Plan. Stock certificates for whole shares purchased under the Plan will be
similarly registered when issued upon a Participant's request. If a Participant
is a Beneficial Owner, such request should be placed through such Participant's
banker, broker or other nominee. See Question 6. A Participant who wishes to
pledge shares credited to such Participant's Plan account must first withdraw
such shares from the account.
WITHDRAWALS AND TERMINATION
26. When may Participants withdraw from the Plan?
Participants may withdraw from the Plan with respect to all or a portion of
the shares held in his or her account in the Plan at any time. If the request
to withdraw is received prior to a dividend record date set by the Board of
Directors for determining Shareholders of record entitled to receive a
dividend, the request will be processed on the day following receipt of the
request by the Plan Administrator.
If the request to withdraw is received by the Plan Administrator on or after
a dividend record date, but before payment date, the Plan Administrator, in its
sole discretion, may either pay such dividend in cash or reinvest it in shares
for the Participant's account. The request for withdrawal will then be
processed as promptly as possible following such dividend payment date. All
dividends subsequent to such dividend payment date or Investment Date will be
paid in cash unless a Shareholder re-enrolls in the Plan, which may be done at
any time.
Any optional cash payments which have been sent to the Plan Administrator
prior to a request for withdrawal will also be invested on the next Investment
Date unless a Participant expressly requests return of that payment in the
request for withdrawal, and the request for withdrawal is received by the Plan
Administrator at least two business days prior to the first day of the Pricing
Period.
27. How does a Participant withdraw from the Plan?
A Participant who wishes to withdraw from the Plan with respect to all or a
portion of the shares held in his or her account in the Plan must notify the
Plan Administrator in writing at its address set forth in the answer to
Question 37. Upon a Participant's withdrawal from the Plan or termination of
the Plan by the Company, certificates for the appropriate number of whole
shares credited to his or her account under the Plan will be issued. A cash
payment will be made for any fraction of a share.
Upon withdrawal from the Plan, a Participant may also request in writing that
the Plan Administrator sell all or part of the shares credited to his or her
account in the Plan. The Plan Administrator will sell the shares as requested
within ten business days after processing the request for withdrawal. The
Participant will receive the proceeds of the sale, less a nominal fee per
transaction paid to the Plan Administrator, any brokerage fees or commissions
and any applicable stock transfer taxes, generally within five business days of
the sale.
18
<PAGE>
28. Are there any automatic termination provisions?
Participation in the Plan will be terminated if the Plan Administrator
receives written notice of the death or adjudicated incompetency of a
Participant, together with satisfactory supporting documentation of the
appointment of a legal representative, at least five business days before the
next Record Date for purchases made through the reinvestment of dividends or
optional cash payments, as applicable. In the event written notice of death or
adjudicated incompetency and such supporting documentation is received by the
Plan Administrator less than five business days before the next Record Date for
purchases made through the reinvestment of dividends or optional cash payments,
as applicable, shares will be purchased for the Participant with the related
cash dividend or optional cash payment and participation in the Plan will not
terminate until after such dividend or payment has been reinvested. Thereafter,
no additional purchase of shares will be made for the Participant's account and
the Participant's shares and any cash dividends paid thereon will be forwarded
to such Participant's legal representative.
OTHER INFORMATION
29. What happens if a Participant sells or transfers all of the shares
registered in the Participant's name?
If a Participant disposes of all shares registered in his or her name, and is
not shown as a Record Owner on a dividend record date, the Participant may be
terminated from the Plan as of such date and such termination treated as though
a withdrawal notice had been received prior to the record date.
30. What happens if the Company declares a dividend payable in shares or
declares a stock split?
Any dividend payable in shares and any additional shares distributed by the
Company in connection with a stock split in respect of shares credited to a
Participant's Plan account will be added to that account. Stock dividends or
split shares which are attributable to shares registered in a Participant's own
name and not in his or her Plan account will be mailed directly to the
Participant as in the case of Shareholders not participating in the Plan.
31. How will shares held by the Plan Administrator be voted at meetings of
shareholders?
If the Participant is a Record Owner, the Participant will receive a proxy
card covering both directly held shares and shares held in the Plan. If the
Participant is a Beneficial Owner, the Participant will receive a proxy
covering shares held in the Plan through his or her broker, bank or other
nominee.
If a proxy is returned properly signed and marked for voting, all the shares
covered by the proxy will be voted as marked. If a proxy is returned properly
signed but no voting instructions are given, all of the Participant's shares
will be voted in accordance with recommendations of the Board of Directors of
the Company, unless applicable laws require otherwise. If the proxy is not
returned, or if it is returned unexecuted or improperly executed, shares
registered in a Participant's name may be voted only by the Participant in
person.
32. What are the responsibilities of the Company and the Plan Administrator
under the Plan?
The Company and the Plan Administrator will not be liable in administering
the Plan for any act done in good faith or required by applicable law or for
any good faith omission to act including, without limitation, any claim of
liability arising out of failure to terminate a Participant's account upon his
or her death, with respect to the prices at which shares are purchased and/or
the times when such purchases are made or with
19
<PAGE>
respect to any fluctuation in the market value before or after purchase or sale
of shares. Notwithstanding the foregoing, nothing contained in the Plan limits
the Company's liability with respect to alleged violations of federal
securities laws.
The Company and the Plan Administrator shall be entitled to rely on completed
forms and the proof of due authority to participate in the Plan, without
further responsibility of investigation or inquiry.
33. May the Plan be changed or discontinued?
Yes. The Company may suspend, terminate, or amend the Plan at any time.
Notice will be sent to Participants of any suspension or termination, or of any
amendment that alters the Plan terms and conditions, as soon as practicable
after such action by the Company.
The Company may substitute another administrator or agent in place of the
Plan Administrator at any time; Participants will be promptly informed of any
such substitution.
Any questions of interpretation arising under the Plan will be determined by
the Company and any such determination will be final.
34. What are the federal income tax consequences of participation in the Plan?
The following summary is based upon an interpretation of current federal tax
law. Participants should consult their own tax advisers to determine particular
tax consequences, including state income tax (and non-income tax, such as stock
transfer tax) consequences, which vary from state to state and which may result
from participation in the Plan and subsequent disposition of shares acquired
pursuant to the Plan. Income tax consequences to Participants residing outside
the United States will vary from jurisdiction to jurisdiction.
Participants in the Plan will be treated for federal income tax purposes as
having received, on the dividend payment date, a distribution in an amount
equal to the fair market value on that date of the shares acquired with
reinvested dividends. Such shares will have a tax basis equal to the same
amount. For federal income tax purposes, the fair market value of shares
acquired with reinvested dividends under the Plan will be equal to 100% of the
average of the high and low sale prices of shares on the related Investment
Date.
Such distribution will be taxable as a dividend to the extent of the
Company's current or accumulated earnings and profits. To the extent the
distribution is in excess of the Company's current or accumulated earnings and
profits, the distribution will be treated first as a tax-free return of
capital, reducing the tax basis in a Participant's shares, and the distribution
in excess of a Participant's tax basis will be taxable as gain realized from
the sale of its shares.
20
<PAGE>
EXAMPLE 1:
The following example may be helpful to illustrate the federal income tax
consequences of the reinvestment of dividends at a 1% discount from Market
Price when shares of Common Stock are purchased directly from the Company.
<TABLE>
<S> <C> <C>
Cash dividends reinvested............................... $100.00
Assumed fair market value and Market Price*............. $15.00
Less 1% discount per share.............................. $(0.15)
-------
Net purchase price per share............................ $14.85
Number of shares purchased ($100.00/$14.85)............. 6.7340
Total taxable dividend resulting from transaction
($15.00 x 6.7340)...................................... $101.01
</TABLE>
- --------
* These prices are assumed for illustrative purposes only, and will vary with
the market price of Common Stock.
Participants will be treated as having received a distribution, upon the
purchase of shares with an optional cash payment, in an amount equal to the
excess, if any, of the fair market value of the shares on the Investment Date
over the amount of the optional cash payment. The taxation of such a
distribution is not entirely clear. Participants should be aware that the
Company will treat the entire amount of the distribution, for tax reporting
purposes, as a distribution taxable as a dividend. It is possible, however,
that all or a portion of such distribution should be treated as a tax-free
return of capital or not treated as a taxable distribution. Participants are
encouraged to consult their own tax advisors in this regard.
Shares acquired under the optional cash payment feature of the Plan will have
a tax basis equal to the amount of the payment plus the excess, if any, of the
fair market value of the shares purchased over the amount of the payment. The
fair market value on an acquisition date is likely to differ from the Market
Price for the Pricing Period immediately preceding the related Investment Date
(which is used to determine the number of shares acquired).
EXAMPLE 2:
The following example may be helpful to illustrate the federal income tax
consequences of the optional cash payment feature at a 3% discount from the
Market Price.
<TABLE>
<S> <C> <C>
Optional cash payment................................... $100.00
Assumed fair market value*.............................. $15.00
Assumed Market Price*................................... $14.75
Less 3% discount per share.............................. $(0.44)
-------
Net purchase price per share............................ $14.31
Number of shares purchased ($100.00/$14.31)............. 6.9881
Total taxable dividend resulting from transaction
(6.9881 x $15.00-$100.00).............................. $ 4.82
</TABLE>
- --------
* These prices are assumed for illustrative purposes only, and will vary with
the market price of Common Stock.
21
<PAGE>
A Participant's holding period for shares acquired pursuant to the Plan will
begin on the day following the Investment Date.
A Participant will not realize any taxable income upon receipt of
certificates for whole shares credited to the Participant's account, either
upon the Participant's request for certain of those shares or upon termination
of participation in the Plan. A Participant will realize gain or loss upon the
sale or exchange of shares acquired under the Plan. A Participant will also
realize gain or loss upon receipt, following termination of participation in
the Plan, of a cash payment for any fractional share equivalent credited to the
Participant's account. The amount of any such gain or loss will be the
difference between the amount that the Participant received for the shares or
fractional share equivalent and the tax basis thereof.
The foregoing discussion is based on the assumption that newly issued or
treasury shares will be purchased directly from the Company. No discount will
be available for shares purchased on the open market with reinvested dividends.
Accordingly, the tax consequences will be different from those set forth in
Example 1. With respect to open market purchases relating to optional cash
payments, the consequences will be generally the same as set forth in Example
2. However, with respect to such optional cash payments the payment of
brokerage commissions by the Company in connection with the purchase of shares
in the open market may be treated as additional dividend income to the
Participant and, in such event, will increase the tax basis of such shares.
35. How are income tax withholding provisions applied to shareholders who
participate in the Plan?
If a Participant fails to provide certain federal income tax certifications
in the manner required by law, dividends on shares of Common Stock, proceeds
from the sale of fractional shares and proceeds from the sale of shares held
for a Participant's account will be subject to federal income tax withholding
at the rate of 31%. If withholding is required for any reason, the appropriate
amount of tax will be withheld. Certain shareholders (including most
corporations) are, however, exempt from the above withholding requirements.
If a Participant is a foreign shareholder whose dividends are subject to
federal income tax withholding at the 30% rate (or a lower treaty rate), the
appropriate amount will be withheld and the balance in shares will be credited
to such Participant's account.
36. Who bears the risk of market fluctuations in the Company's Common Stock?
A Participant's investment in shares held in the Plan account is no different
from his or her investment in directly held shares. The Participant bears the
risk of any loss and enjoys the benefits of any gain from market price changes
with respect to such shares.
37. Who should be contacted with questions about the Plan?
All correspondence regarding the Plan should be directed to:
THE BANK OF NEW YORK
INVESTOR RELATIONS DEPARTMENT
P.O. BOX 11258
CHURCH STREET STATION
NEW YORK, NEW YORK 10286-1258
TELEPHONE (800) 524-4458
Please mention CWM Mortgage Holdings, Inc. and this Plan in all correspondence.
22
<PAGE>
38. How is the Plan interpreted?
Any question of interpretation arising under the Plan will be determined by
the Company and any such determination will be final. The Company may adopt
rules and regulations to facilitate the administration of the Plan. The terms
and conditions of the Plan and its operation will be governed by the laws of
the State of California.
39. What are some of the Participant responsibilities under the Plan?
Plan Shares are subject to escheat to the state in which the Participant
resides in the event that such shares are deemed, under such state's laws, to
have been abandoned by the Participant. Participants, therefore, should notify
the Plan Administrator promptly in writing of any change of address. Account
statements and other communications to Participants will be addressed to them
at the last address of record provided by Participants to the Plan
Administrator.
Participants will have no right to draw checks or drafts against their Plan
accounts or to instruct the Plan Administrator with respect to any shares of
Common Stock or cash held by the Plan Administrator except as expressly
provided herein.
DIVIDENDS
The Company has paid dividends since its incorporation. In order to
accommodate the provisions of this Plan, the Company anticipates that dividends
will be payable on or about the first business day of March, June, September
and December.
USE OF PROCEEDS
The Company does not know either the number of shares of Common Stock that
will be ultimately sold pursuant to the Plan or the prices at which such shares
will be sold. However, the Company proposes to use the net proceeds from the
sale of newly issued or treasury shares of Common Stock for general corporate
purposes.
PLAN OF DISTRIBUTION
Except to the extent the Plan Administrator purchases Common Stock in open
market transactions, the Common Stock acquired under the Plan will be sold
directly by the Company through the Plan. The Company may sell Common Stock to
owners of shares (including brokers or dealers) who, in connection with any
resales of such shares, may be deemed to be underwriters. Such shares,
including shares acquired pursuant to waivers granted with respect to the
optional cash payment feature of the Plan, may be resold in market transactions
(including coverage of short positions) on any national securities exchange on
which shares of Common Stock trade or in privately negotiated transactions. The
Common Stock is currently listed on the New York Stock Exchange. Under certain
circumstances, it is expected that a portion of the shares of Common Stock
available for issuance under the Plan will be issued pursuant to such waivers.
The difference between the price such owners pay to the Company for shares of
Common Stock acquired under the Plan, after deduction of the applicable
discount from the Market Price, and the price at which such shares are resold,
may be deemed to constitute underwriting commissions received by such owners in
connection with such transactions.
23
<PAGE>
Subject to the availability of shares of Common Stock registered for issuance
under the Plan, there is no total maximum number of shares that can be issued
pursuant to the reinvestment of dividends. From time to time, financial
intermediaries may engage in positioning transactions in order to benefit from
the discount from the Market Price of Common Stock acquired through the
reinvestment of dividends under the Plan.
Except with respect to open market purchases of Common Stock relating to
reinvested dividends, the Company will pay any and all brokerage commissions
and related expenses incurred in connection with purchases of Common Stock
under the Plan. Upon withdrawal by a Participant from the Plan by the sale of
Common Stock held under the Plan, the Participant will receive the proceeds of
such sale less a nominal fee per transaction paid to the Plan Administrator (if
such resale is made by the Plan Administrator at the request of a Participant),
any related brokerage commissions and any applicable transfer taxes.
Common Stock may not be available under the Plan in all states. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, any Common Stock or other securities in any state or any other
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction.
LEGAL OPINION
The validity of the securities offered hereby has been passed upon by Richard
H. Wohl, General Counsel of the Company.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 1994 have been so incorporated in reliance on
the report of Grant Thornton LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
INDEMNIFICATION
The Company's Certificate of Incorporation eliminates, to the fullest extent
permitted by Delaware law, director liability for monetary damage for breaches
of the directors' fiduciary duty of care. The Company's Certificate of
Incorporation and Bylaws also provide that the Company shall indemnify
directors and officers under certain circumstances for liabilities and expenses
incurred by reason of their actions as agents of the Company. In addition, the
Company maintains an insurance policy that indemnifies directors and officers
against certain liabilities.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in said Act and is therefore unenforceable.
24
<PAGE>
GLOSSARY
"Beneficial Owners" means shareholders who beneficially own shares of Common
Stock that are registered in a name other than their own (for example, in the
name of a broker, bank or other nominee).
"B&N Form" means a Broker and Nominee form.
"business day" means any day other than Saturday, Sunday or legal holiday on
which the NYSE is closed or a day on which the Plan Administrator is authorized
or obligated by law to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, $.01 par value, of the Company.
"Company" means CWM Mortgage Holdings, Inc.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Investment Date" means, with respect to Common Stock acquired directly from
the Company and relating to a dividend reinvestment, the dividend payment date
declared by the Board of Directors (unless such date is not a business day in
which case it is the first business day immediately thereafter) or, in the case
of open market purchases, no later than ten business days following the
dividend payment date; and with respect to Common Stock acquired directly from
the Company and relating to an optional cash payment, generally on or about the
twenty-second day of each month; or, in the case of open market purchases, no
later than the last business day of each month. In no event, however, will the
Investment Date relating to dividend reinvestments be less than ten days from
the Investment Date relating to optional cash payments.
"Market Price" means, with respect to Common Stock acquired directly from the
Company and relating to a dividend reinvestment, the average of the high and
low sales prices, computed to four decimal places, of the Common Stock on the
NYSE on the Investment Date, or if no trading occurs in the Common Stock on the
Investment Date, the average of the high and low sales prices for the first
trading day immediately preceding the Investment Date for which trades are
reported. With respect to dividend reinvestments which will be reinvested in
Common Stock purchased in the open market, "Market Price" shall mean the
weighted average of the actual prices paid, computed to four decimal places,
for all of the Common Stock purchased by the Plan Administrator with all
Participants' reinvested dividends for the related quarter. With respect to
Common Stock acquired directly from the Company and relating to optional cash
payments, "Market Price" shall mean the average of the daily high and low sales
prices of the Common Stock as reported on the NYSE during the Pricing Period.
With respect to optional cash payments which will be reinvested in Common Stock
purchased in the open market, "Market Price" shall mean the weighted average of
the actual prices paid, computed to four decimal places, for all of the Common
Stock purchased by the Plan Administrator with all Participants' optional cash
payments for the related month.
"NYSE" means the New York Stock Exchange.
"Participant" means an eligible holder of Common Stock who wishes to
participate in the Plan.
"Participating Shares" means shares of Common Stock owned by a Participant on
the applicable record date as to which such Participant has directed the
Company to pay the related cash dividends to the Plan Administrator.
25
<PAGE>
"Plan" means the CWM Mortgage Holdings, Inc. Dividend Reinvestment and Stock
Purchase Plan.
"Plan Administrator" means a plan administrator that administers the Plan,
keeps records, sends statements of account to each Participant and performs
other duties related to the Plan. The Bank of New York currently serves as Plan
Administrator of the Plan.
"Plan Shares" means all whole and fractional shares of Common Stock credited
to a Participant's Plan account.
"Pricing Period" means the period encompassing the twelve Trading Days
preceding the relevant optional cash payment Investment Date.
"Record Date" means, with respect to reinvestments of dividends, the record
date declared by the Board of Directors for such dividend; and with respect to
optional cash payments, two business days prior to the commencement of the
related Pricing Period.
"Record Owners" means shareholders who own shares of Common Stock in their
own names.
"Requests for Waiver" means a written request from a Participant to make
optional cash payments in excess of $10,000.
"Securities Act" means the Securities Act of 1933, as amended.
"Threshold Price" means the minimum price, if any, established by the Company
that the average high and low prices of the Common Stock must equal or exceed
during each Trading Day of the Pricing Period for optional cash payments made
pursuant to Requests for Waiver.
"Trading Day" means a day on which trades in the Common Stock are reported on
the NYSE.
"Waiver Discount" means the discount from the Market Price applicable to
optional cash payments made pursuant to Requests for Waiver. Such discount will
vary between 0% and 5% of the Market Price and may vary each month.
26
<PAGE>
SCHEDULE A
OPTIONAL CASH PAYMENTS
<TABLE>
<CAPTION>
THRESHOLD PRICE AND PRICING PERIOD
WAIVER DISCOUNT OPTIONAL CASH COMMENCEMENT
SET DATE RECORD DATE PAYMENT DUE DATE DATE INVESTMENT DATE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 27, 1995 January 2, 1996 January 3, 1996 January 4, 1996 January 22, 1996
January 25, 1996 January 30, 1996 January 31, 1996 February 1, 1996 February 20, 1996
February 28, 1996 March 4, 1996 March 5, 1996 March 6, 1996 March 22, 1996
March 27, 1996 April 1, 1996 April 2, 1996 April 3, 1996 April 22, 1996
April 29, 1996 May 2, 1996 May 3, 1996 May 6, 1996 May 22, 1996
May 30, 1996 June 4, 1996 June 5, 1996 June 6, 1996 June 24, 1996
June 26, 1996 July 1, 1996 July 2, 1996 July 3, 1996 July 22, 1996
July 30, 1996 August 2, 1996 August 5, 1996 August 6, 1996 August 22, 1996
August 28, 1996 September 3, 1996 September 4, 1996 September 5, 1996 September 23, 1996
September 27, 1996 October 2, 1996 October 3, 1996 October 4, 1996 October 22, 1996
October 30, 1996 November 4, 1996 November 5, 1996 November 6, 1996 November 22, 1996
November 27, 1996 December 3, 1996 December 4, 1996 December 5, 1996 December 23, 1996
December 27, 1996 January 2, 1997 January 3, 1997 January 6, 1997 January 22, 1997
January 28, 1997 January 31, 1997 February 3, 1997 February 4, 1997 February 21, 1997
February 27, 1997 March 4, 1997 March 5, 1997 March 6, 1997 March 24, 1997
March 27, 1997 April 2, 1997 April 3, 1997 April 4, 1997 April 22, 1997
April 29, 1997 May 2, 1997 May 5, 1997 May 6, 1997 May 22, 1997
May 29, 1997 June 3, 1997 June 4, 1997 June 5, 1997 June 23, 1997
June 26, 1997 July 1, 1997 July 2, 1997 July 3, 1997 July 22, 1997
July 30, 1997 August 4, 1997 August 5, 1997 August 6, 1997 August 22, 1997
August 27, 1997 September 2, 1997 September 3, 1997 September 4, 1997 September 22, 1997
September 29, 1997 October 2, 1997 October 3, 1997 October 6, 1997 October 22, 1997
October 30, 1997 November 4, 1997 November 5, 1997 November 6, 1997 November 24, 1997
November 26, 1997 December 2, 1997 December 3, 1997 December 4, 1997 December 22, 1997
</TABLE>
DIVIDEND REINVESTMENTS/1/
<TABLE>
<CAPTION>
RECORD INVESTMENT/2/
DATE DATE
-----------------------------------------
<S> <C>
January 29, 1996 March 1, 1996
April 29, 1996 June 3, 1996
July 29, 1996 September 3, 1996
October 28, 1996 December 2, 1996
January 31, 1997 March 3, 1997
April 28, 1997 June 2, 1997
July 28, 1997 September 2, 1997
October 27, 1997 December 1, 1997
</TABLE>
- --------
/1/ The dates indicated are those expected to be applicable under the Plan with
respect to future dividends, if and when declared by the Board of Directors.
The actual record and payment dates will be determined by the Board of
Directors.
/2/ The Investment Date relating to dividends is also the pricing date with
respect to Common Stock acquired directly from the Company. See Question 12.
27
<PAGE>
SUMMARY DATE INFORMATION
. The Investment Date is, with respect to Common Stock acquired directly from
the Company and relating to a dividend reinvestment, the dividend payment
date declared by the Board of Directors (unless such date is not a business
day in which case it is the first business day immediately thereafter) or,
in the case of open market purchases, no later than ten business days
following the dividend payment date; and with respect to Common Stock
acquired directly from the Company and relating to an optional cash payment,
generally on or about the twenty-second day of each month; or, in the case
of open market purchases, no later than the last business day of each month.
In no event, however, will the Investment Date relating to dividend
reinvestments be less than ten days from the Investment Date relating to
optional cash payments.
. The Pricing Period for optional cash payments which are invested in Common
Stock acquired directly from the Company is the twelve Trading Days
preceding the relevant Investment Date.
. Optional cash payments must be received by the Plan Administrator by the end
of the business day immediately preceding the commencement of the relevant
Pricing Period.
. The Record Date for dividends is set by the Board of Directors. The Record
Date for optional cash payments is two business days prior to the
commencement of the related Pricing Period.
. The Waiver Discount and the Threshold Price, if any, are set three business
days prior to the applicable Record Date.
28
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (ESTIMATED):
<TABLE>
<S> <C>
Registration fee................................................. $22,778
Listing fees..................................................... $ 1,500
Printing expenses................................................ $ 6,500
Accounting fees and expenses..................................... $ 8,000
Legal fees and expenses.......................................... $ --
Blue sky fees and expenses....................................... $ 2,000
-------
TOTAL............................................................ $40,778
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware provides
that a corporation shall have the power, and in some cases is required, to
indemnify an agent, including an officer or director, who was or is a party or
is threatened to be made a party to any proceedings, against expenses,
judgments, fines, settlements and other amounts under certain circumstances.
The Certificate of Incorporation and Bylaws of the Company provide, in
effect, that, to the extent and under the circumstances permitted by Section
145 of the General Corporation Law of Delaware, the Company shall indemnify any
person who was or is a party or is threatened to be made a party to any action,
suit or proceeding by reason of the fact that he or she is or was a director,
officer, employee or agent of the Company. The Company maintains insurance
covering certain liabilities of the directors and officers of the Company. The
Company has also entered into contractual arrangements with its directors and
officers pursuant to which such persons may be entitled to indemnity from the
Company against certain liabilities arising from the discharge of their duties
in such capacities.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in said Act and is therefore unenforceable.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
4. Dividend Reinvestment and Stock Purchase Plan (included in the
Prospectus)
5. Opinion of Counsel (Richard H. Wohl, General Counsel of the Company)
*23.1 Consent of Grant Thornton LLP
23.2 Consent of Counsel (included in Exhibit 5)
*24.1 Power of Attorney of Certain Officers and Directors (included on page
II-3)
</TABLE>
- -------------
* Previously filed.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-
effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, unless the information required to be included
in such post-effective amendment is contained in a periodic report
filed by Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 and incorporated herein by reference;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement, unless the information required to be included
in such post-effective amendment is contained in a periodic report
filed by Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 and incorporated herein by reference;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bonafide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 14(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO
THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF PASADENA, STATE OF CALIFORNIA, ON
MARCH 11, 1996.
CWM MORTGAGE HOLDINGS, INC.
By /s/ Michael W. Perry
_____________________________________
Michael W. Perry
Executive Vice President and
Chief Operating Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ David S. Loeb* Director, Chief Executive March 11, 1996
____________________________________ Officer and Chairman of the
David S. Loeb Board of Directors
(Principal Executive
Officer)
/s/ Angelo R. Mozilo* Director, President and Vice March 11, 1996
____________________________________ Chairman of the Board of
Angelo R. Mozilo Directors
/s/ Michael W. Perry Executive Vice President and March 11, 1996
____________________________________ Chief Operating Officer
Michael W. Perry (Principal Financial
Officer)
/s/ Carmella L. Grahn Senior Vice President and March 11, 1996
____________________________________ Chief Accounting Officer
Carmella L. Grahn (Principal Accounting
Officer)
/s/ Lyle E. Gramley* Director March 11, 1996
____________________________________
Lyle E. Gramley
/s/ Thomas J. Kearns* Director March 11, 1996
____________________________________
Thomas J. Kearns
/s/ Frederick J. Napolitano* Director March 11, 1996
____________________________________
Frederick J. Napolitano
</TABLE>
*By: /s/ Michael W. Perry
_____________________________
Michael W. Perry
Attorney-in-fact
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
------- ------- ----------
<C> <S> <C>
4. Dividend Reinvestment and Stock Purchase Plan (included
in the Prospectus)
5. Opinion of Counsel (Richard H. Wohl, General Counsel of
the Company)
*23.1 Consent of Grant Thornton LLP
23.2 Consent of Counsel (included in Exhibit 5)
*24.1 Power of Attorney of Certain Officers and Directors
(included on page II-3)
</TABLE>
- ---------------
* Previously filed.
II-4
<PAGE>
EXHIBIT 5
[LETTERHEAD OF CWM MORTGAGE HOLDINGS, INC.]
March 11, 1996
CWM Mortgage Holdings, Inc.
35 North Lake Avenue, 7th Floor
Pasadena, California 91101
Ladies and Gentlemen:
I have acted as counsel to CWM Mortgage Holdings, Inc., a Delaware
corporation (the "Company"), in connection with the registration of 3,900,000
shares (the "Shares") of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), to be issued pursuant to the CWM Mortgage Holdings, Inc.
Dividend Reinvestment and Stock Purchase Plan (the "Plan").
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the
"Securities Act").
In connection with this opinion, I have examined and am familiar with
originals or copies, certified or otherwise identified to my satisfaction, of
(i) the Registration Statement on Form S-3 relating to the Shares, filed with
the Securities and Exchange Commission (the "Commission") under the Securities
Act on February 16, 1996 (as such Registration Statement may be subsequently
amended and together with all exhibits thereto, the "Registration Statement"),
(ii) the Certificate of Incorporation of the Company as currently in effect,
(iii) the By-laws of the Company as currently in effect, (iv) a specimen of the
certificate to be used to represent the Common Stock, and (v) resolutions of the
Board of Directors of the Company relating to the issuance of the Shares and the
filing of the Registration Statement. I have also examined originals or copies,
certified or otherwise identified to my satisfaction, of such records of the
Company and such agreements, certificates of public officials, certificates of
officers or representatives of the Company and others, and such other documents,
certificates and records, as I have deemed necessary or appropriate as a basis
for the opinion set forth herein.
In my examination, I have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to any facts material
to the opinion expressed herein, I have relied upon oral or written statements
and representations of officers and other representatives of the Company and
others.
<PAGE>
Based upon and subject to the foregoing, I am of the opinion that the
Shares, when issued in accordance with the Plan, will be validly issued, fully
paid and nonassessable.
I hereby consent to the filing of this opinion with the Commission as
Exhibit 5 to the Registration Statement and to the use of my name under the
heading "Legal Opinion" in the prospectus contained in the Registration
Statement.
This opinion is furnished to you solely in connection with the
Registration Statement.
Very truly yours,
/s/ Richard H. Wohl
Richard H. Wohl
Senior Vice President and
General Counsel
2
