<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 1994.
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CRIIMI MAE INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
MARYLAND 52-1622022
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
11200 ROCKVILLE PIKE
ROCKVILLE, MARYLAND 20852
TELEPHONE NUMBER (301) 468-9200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
WILLIAM B. DOCKSER
CHAIRMAN OF THE BOARD
11200 ROCKVILLE PIKE
ROCKVILLE, MARYLAND 20852
(301) 468-9200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
MORRIS F. DEFEO, JR., ESQ.
ARENT FOX KINTNER PLOTKIN & KAHN
1050 CONNECTICUT AVENUE, N.W.
WASHINGTON, DC 20036-5339
----------------
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 this 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]
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT AGGREGATE AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT(1) PRICE(1) FEE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share................. 375,000 Shares $13.17 $4,938,750 $1,704
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g) of the Securities Act of 1933, as amended.
----------------
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 THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 APRIL 8, 1994
375,000 SHARES
[LOGO OF CRIIMI MAE INC. APPEARS HERE]
CRIIMI MAE INC.
COMMON STOCK
This offering consists of 375,000 shares of Common Stock of CRIIMI MAE Inc.
("CRIIMI MAE"), par value $0.01 per share (the "Common Stock"), which are
issuable upon the exercise of certain warrants to purchase shares of Common
Stock (the "Warrants") to be issued by CRIIMI MAE. All of the shares of Common
Stock offered hereby are being issued and sold by CRIIMI MAE. Each Warrant
entitles the holder thereof to purchase one share of Common Stock at an
exercise price of $13.17 per share, subject to adjustment in certain
circumstances. Expenses of the offering, estimated to be approximately
$100,000, will be paid in full by CRIIMI MAE. The proceeds, if any, from the
exercise of any Warrants will be used by CRIIMI MAE for general corporate
purposes, including, without limitation, working capital. See "Use of
Proceeds."
The Common Stock is listed on the New York Stock Exchange under the symbol
"CMM." On April 7, 1994, the reported last sale price of the Common Stock on
the New York Stock Exchange Composite Tape was $10.50 per share. See "Price
Range of Common Stock and Dividends."
If necessary, the terms of each sale of Common Stock offered hereby,
including the public offering price, will be set forth in an accompanying
Prospectus Supplement (the "Prospectus Supplement").
-----------
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 DATE OF THIS PROSPECTUS IS , 1994
<PAGE>
AVAILABLE INFORMATION
CRIIMI MAE and its subsidiary, CRI Liquidating REIT, Inc. ("CRI
Liquidating"), are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith file reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). Reports, proxy statements and
other information filed by CRIIMI MAE and CRI Liquidating can be inspected and
copied at the SEC's Public Reference Room, 450 Fifth Street, N.W., Washington,
D.C. 20549 and the SEC's Regional Offices at 7 World Trade Center, New York,
New York 10007 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and copies of such material can be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, reports, proxy material and other information
concerning CRIIMI MAE and CRI Liquidating may be inspected at The New York
Stock Exchange ("NYSE"), 20 Broad Street, New York, New York 10005.
This Prospectus constitutes part of a Registration Statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement") filed
by CRIIMI MAE with the SEC under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information
included in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. Reference is made to the
Registration Statement for further information with respect to CRIIMI MAE and
the shares of CRIIMI MAE Common Stock offered hereby ("Shares").
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by CRIIMI MAE with the SEC (File No.
1-10360) are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1993, as
filed with the SEC on February 16, 1994, and as amended by Amendment on
Form 10-K/A, filed with the SEC on March 11, 1994.
2. Definitive Proxy Statement dated April 6, 1993.
3. Form 8-A, as filed with the SEC on October 16, 1989.
4. Form 8-B, as filed with the SEC on October 27, 1993.
All documents filed by CRIIMI MAE pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Shares offered hereby shall be deemed to be
incorporated by reference in this Prospectus from the date of filing of such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
CRIIMI MAE will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, on the
written or oral request of any such person, a copy of any or all of the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference. Requests for such copies
should be directed to: CRIIMI MAE Inc., Investor Services, The CRI Building,
11200 Rockville Pike, Rockville, Maryland 20852, or telephone (301) 468-9200 or
toll-free (800) 678-1116.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information appearing elsewhere in this
Prospectus. References to CRIIMI MAE appearing in this Prospectus shall not
include CRI Liquidating, unless the context otherwise requires.
CRIIMI MAE
CRIIMI MAE, an infinite-life, actively managed real estate investment trust
("REIT"), is the largest REIT specializing in government insured and guaranteed
mortgage investments secured by multifamily housing complexes ("Government
Insured Multifamily Mortgages") located throughout the United States. CRIIMI
MAE's principal objectives are to provide stable or growing quarterly cash
distributions to its stockholders while preserving and protecting its capital.
CRIIMI MAE seeks to achieve these objectives by investing primarily in
Government Insured Multifamily Mortgages using a combination of debt and equity
financing.
CRIIMI MAE's portfolio and day-to-day operations are managed by an affiliate
of C.R.I., Inc. ("CRI"), an international real estate investment firm which is
currently ranked as the sixth largest real estate asset manager in the United
States. In its nearly 20 years as an investor in, and manager of, debt and
equity investments in multifamily properties, CRI has used its expertise to
assemble one of the largest multifamily portfolios in the United States.
CRIIMI MAE's use of leverage carries with it the risk that the cost of its
borrowings could increase relative to the return on its Government Insured
Multifamily Mortgages, which could result in reduced net income or a net loss
and thereby reduce the return to stockholders. CRIIMI MAE has entered into
interest rate hedging agreements which partially limit the adverse effects of
rising interest rates and actively reviews its asset/liability management
techniques in an effort to make optimal use of its borrowing ability based on
market conditions and opportunities. In certain adverse interest rate
environments, including a sustained period of rising interest rates, CRIIMI MAE
could be required to liquidate a portion of its assets at a loss in order to
comply with certain covenants under its financing facilities. CRIIMI MAE's
dividends are affected by numerous other factors, including the dividends which
CRIIMI MAE receives on its shares of CRI Liquidating.
CRIIMI MAE invests primarily in two types of Government Insured Multifamily
Mortgages: loans insured by the Federal Housing Administration (the "FHA")
pursuant to provisions of the National Housing Act, which are first or second
liens on residential apartment, nursing home or townhouse complexes ("FHA-
Insured Loans"); and mortgage-backed securities which are guaranteed by the
Government National Mortgage Association ("GNMA") as to the monthly payment of
the outstanding principal of, and interest on, the underlying multifamily
mortgages ("GNMA Securities"). As of December 31, 1993, CRIIMI MAE owned
directly 126 Government Insured Multifamily Mortgages with an amortized cost of
approximately $499 million, of which 46 were FHA-Insured Loans with an
amortized cost of approximately $152 million and 80 were GNMA Securities with
an amortized cost of approximately $347 million. As of December 31, 1993, the
weighted average coupon rate of CRIIMI MAE's Government Insured Multifamily
Mortgages was approximately 8.4% and the weighted average maturity thereof was
approximately 34 years. See "CRIIMI MAE--Description of Assets"; and "Recent
Developments."
In addition to its portfolio of Government Insured Multifamily Mortgages and
other assets, CRIIMI MAE also owns approximately 57% of the issued and
outstanding common stock of CRI Liquidating, a finite-life, self-liquidating
REIT which owns Government Insured Multifamily Mortgages. CRI Liquidating's
common stock is listed on the NYSE under the symbol "CFR". As of December 31,
1993, CRI Liquidating owned 63 Government Insured Multifamily Mortgages with an
amortized cost of approximately $192 million (which were accounted for at a
fair value of $243 million), 61 of which were FHA-Insured Loans with an
amortized cost of approximately $187 million (which were accounted for at a
fair value of $238 million) and two of which were GNMA Securities with an
amortized cost of approximately $5 million (which were accounted for at a fair
value of $5 million). As of December 31, 1993, the weighted average coupon rate
of CRI Liquidating's Government Insured Multifamily Mortgages was approximately
7.7% and the weighted average maturity thereof was approximately 27 years. See
"CRIIMI MAE--Description of Assets." On February 10, 1994, CRI Liquidating sold
12 Government Insured
3
<PAGE>
Multifamily Mortgages with an aggregate amortized cost of approximately $37
million, constituting approximately 20% of CRI Liquidating's portfolio as of
December 31, 1993, for a financial statement gain of $11.7 million and a tax
basis gain of approximately $14.7 million.
RECENT DEVELOPMENTS
In March 1994, CRIIMI MAE sold 5,000,000 shares of Common Stock in an
underwritten public offering for net proceeds of approximately $52 million (the
"Offering"). As of April 6, 1994, CRIIMI MAE acquired 12 additional Government
Insured Multifamily Mortgages with an aggregate amortized cost of approximately
$41.7 million, 3 of which are FHA-Insured Loans with an aggregate amortized
cost of approximately $20.3 million and 9 of which are GNMA Securities with an
aggregate amortized cost of approximately $21.4 million. As of April 6, 1994,
the weighted average coupon rate of such newly acquired Government Insured
Multifamily Mortgages was approximately 7.4% and the weighted average maturity
thereof was approximately 31.3 years. CRIIMI MAE funded such acquisitions with
a portion of the net proceeds from the Offering.
As of April 6, 1994, CRIIMI MAE also has commitments to acquire 14 additional
Government Insured Multifamily Mortgages with an aggregate amortized cost of
approximately $75.7 million, 2 of which are FHA-Insured Loans with an aggregate
amortized cost of approximately $19.6 million and 12 of which are GNMA
Securities with an aggregate amortized cost of approximately $56.1 million.
CRIIMI MAE intends to fund such commitments with the remaining net proceeds
from the Offering and with borrowings of approximately $65.4 million. The
anticipated new borrowings will be hedged by interest rate cap agreements with
notional amounts of $35 million, $50 million and $50 million, respectively,
caps of 6.125%, 6.375% and 6.5%, respectively, and expiration dates of February
2, 1999, March 15, 1997 and March 25, 1998, respectively.
As of December 31, 1993, CRIIMI MAE had outstanding borrowings of
approximately $479 million, approximately $384 million of which was based on
the three-month London Interbank Offered Rate ("LIBOR") and approximately $95
million of which was based on the 30-day Commercial Paper ("CP") rate. As of
February 28, 1994, the $95 million of CP rate-based borrowings was converted
into three-month LIBOR-based borrowings. Of the approximately $479 million in
outstanding borrowings, approximately $314 million was hedged with cap
agreements based on three-month LIBOR, approximately $50 million was hedged
with cap agreements based on the 30-day CP rate and approximately $115 million
was hedged with collar agreements based on the 30-day CP rate. Between December
31, 1993 and April 7, 1994, three-month LIBOR increased from 3.313% to 4.0%.
This rise in three-month LIBOR will increase CRIIMI MAE's interest expense and
decrease Net Positive Spread (as defined below) with respect to borrowings
hedged by the cap agreements because the maximum interest rates provided by the
cap agreements are above current interest rates. However, this increase in
three-month LIBOR will not increase interest expense with respect to borrowings
which are hedged by collars because current interest rates are still below the
minimum interest rates provided by such collar agreements. As of December 31,
1993, CRIIMI MAE also had cap agreements with a notional amount of
approximately $38 million to hedge borrowings anticipated to fund mortgage
commitments. See "CRIIMI MAE--Investment Policies."
In connection with the settlement of certain class action litigation
involving CRIIMI MAE and certain of its affiliates, CRIIMI MAE entered into a
settlement agreement on September 24, 1993 providing, among other things, for
the issuance of up to 2.5 million Warrants, exercisable for 18 months from
issuance, to purchase Common Stock at an exercise price of $13.17 per share
(the "Settlement Agreement"). The actual number of Warrants to be issued is
dependent on the number of class members who have submitted proofs of claim by
the submission date required by the Settlement Agreement (the "Submission
Date"). Based on proofs of claim received as of April 1, 1994, CRIIMI MAE
estimates that the maximum number of Warrants to be issued pursuant to the
Settlement Agreement will not exceed 375,000. See "Recent Developments";
"Description of Securities--Warrants"; and "The Offering."
4
<PAGE>
THE OFFERING
375,000 Shares*
Common Stock offered by CRIIMI MAE to holders
of Warrants....................................
Common Stock to be outstanding after the
offering assuming exercise of all Warrants.....
25,558,533 Shares*
Use of proceeds................................. General corporate purposes,
including working capital.
See "Use of Proceeds."
NYSE symbol..................................... CMM
- --------
(*) Assumes issuance and exercise of 375,000 Warrants which are exercisable for
shares of Common Stock on a one-for-one basis.
5
<PAGE>
CONSOLIDATED SUMMARY FINANCIAL DATA
This selected data is qualified in its entirety by the detailed information and
financial statements included in the documents incorporated herein by
reference. See "Incorporation of Certain Documents by Reference." In addition,
see "Recent Developments" for a discussion of developments affecting financial
data since December 31, 1993. Additional consolidated selected financial data
may be set forth in a Prospectus Supplement.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1989(A) 1990 1991 1992 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Total income............ $42,655 $55,030 $54,318 $50,702 $56,450
Interest expense........ 1,136 22,346 25,791 24,392 28,008
Income before mortgage
dispositions, gain on
sale of shares of
subsidiary and loss on
investment in limited
partnership............ 37,120 26,958 22,450 20,567 14,698
Net gains from mortgage
dispositions........... 2,958 3,794 4,048 5,733 7,358
Net income.............. 19,540 18,373 9,001(b) 16,041 15,757(c)
Net income per share.... 0.95 0.91 0.45(b) 0.79 0.78(c)
Tax basis income........ 26,987 22,276 22,037 21,626 23,015
Tax basis income per
share ................. 1.31 1.10 1.09 1.07 1.14
Dividends per share..... 1.49(d) 1.08 1.08 1.08 1.12
Weighted average shares
outstanding............ 20,567 20,184 20,184 20,184 20,184
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------
1989(A) 1990 1991 1992 1993
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Investment in mortgages
(excludes mortgages
held for disposition).. $456,692 $546,448 $446,703 $448,319 $730,265(e)
Total assets............ 502,530 602,786 546,054 526,667 808,701
Total debt.............. 139,426 264,605 245,555 247,968 479,045
Shareholders' equity.... 223,472 211,195 198,397 193,109 215,289(e)
</TABLE>
- -------
(a) All financial information of CRIIMI MAE for the periods prior to the Merger
(defined below) on November 27, 1989 has been presented in a manner similar
to a pooling of interests, which effectively combines the historical
results of the CRIIMI Funds (defined below). The dividends and net income
per share amounts for the year ended December 31, 1989 have been restated
based upon the weighted average shares outstanding as if the Merger had
been consummated on January 1, 1989.
(b) Includes recognition of an extraordinary loss of approximately $6.6 million
($0.33 per share) resulting from the refinancing of certain notes payable.
(c) Includes recognition of a $3.3 million ($0.16 per share) gain on the sale
of shares of CRI Liquidating and a $4.9 million ($0.24 per share) expense
for the termination of an interest rate swap.
(d) This amount does not include the special dividend of $2.31 per share paid
to CRIIMI MAE stockholders of record on November 27, 1989.
(e) Includes net unrealized gain on mortgage investments of CRI Liquidating of
approximately $29.0 million, due to the implementation of SFAS No. 115 (as
described below).
6
<PAGE>
CRIIMI MAE
GENERAL
CRIIMI MAE, an infinite-life, actively managed REIT, is the largest REIT
specializing in Government Insured Multifamily Mortgages. CRIIMI MAE's
principal objectives are to provide stable or growing quarterly cash
distributions to its stockholders while preserving and protecting its capital.
CRIIMI MAE seeks to achieve these objectives by investing primarily in
Government Insured Multifamily Mortgages using a combination of debt and equity
financing. CRIIMI MAE and CRI Liquidating are Maryland corporations. The
principal executive offices of CRIIMI MAE and CRI Liquidating are located at
the CRI Building, 11200 Rockville Pike, Rockville, Maryland 20852, and their
telephone number is (301) 468-9200.
BACKGROUND
CRIIMI MAE and its subsidiary, CRI Liquidating, were formed in 1989 to effect
the merger into CRI Liquidating (the "Merger") of three federally insured
mortgage funds sponsored by CRI: CRI Insured Mortgage Investments Limited
Partnership ("CRIIMI I"); CRI Insured Mortgage Investments II, Inc. ("CRIIMI
II"); and CRI Insured Mortgage Investments III Limited Partnership ("CRIIMI
III" and together with CRIIMI I and CRIIMI II, the "CRIIMI Funds"). The Merger
was effected to provide certain potential benefits to investors in the CRIIMI
Funds, including the elimination of unrelated business taxable income for
certain tax-exempt investors, the diversification of investments, the reduction
of general overhead and administrative costs as a percentage of assets and
total income and the simplification of tax-reporting information. In the
Merger, which was approved by investors in each of the CRIIMI Funds and
subsequently consummated on November 27, 1989, investors in the CRIIMI Funds
received, at their option, shares of CRI Liquidating common stock ("CRI
Liquidating Shares") or shares of CRIIMI MAE Common Stock.
Investors in the CRIIMI Funds that received shares of CRIIMI MAE Common Stock
became stockholders in an infinite-life, actively managed REIT having the
potential to increase the size of its portfolio and enhance the returns to its
stockholders. CRIIMI MAE stockholders retained their economic interests in the
assets of the CRIIMI Funds which were transferred to CRI Liquidating through
the issuance of one CRI Liquidating Share to CRIIMI MAE for each share of
CRIIMI MAE Common Stock issued to investors in the Merger. Upon the completion
of the Merger, CRIIMI MAE held a total of 20,361,807 CRI Liquidating Shares, or
approximately 67% of the issued and outstanding CRI Liquidating Shares. As of
the date of this Prospectus, CRIIMI MAE holds a total of 17,199,307 CRI
Liquidating Shares, or approximately 57% of the issued and outstanding CRI
Liquidating Shares.
Investors in the CRIIMI Funds that received CRI Liquidating Shares, as well
as CRIIMI MAE, became stockholders in a finite-life, self-liquidating REIT the
assets of which consist primarily of Government Insured Multifamily Mortgages
and other assets formerly held by the CRIIMI Funds. CRI Liquidating intends to
hold, manage and dispose of its mortgage investments in accordance with the
objectives and policies of the CRIIMI Funds, including disposing of any
remaining mortgage investments by 1997 through an orderly liquidation.
On September 6, 1991, CRIIMI MAE, through its wholly owned subsidiary CRIIMI,
Inc., acquired from Integrated Resources, Inc. all of the general partnership
interests in four publicly held limited partnerships known as the American
Insured Mortgage Investors Funds (the "AIM Funds"). The AIM Funds own mortgage
investments which are substantially similar to those owned by CRIIMI MAE and
CRI Liquidating. CRIIMI, Inc. receives the general partner's share of income,
loss and distributions (which ranges among the AIM Funds from 2.9% to 4.9%)
from each of the AIM Funds. In addition, CRIIMI MAE owns indirectly a limited
partnership interest in the adviser to the AIM Funds, in respect of which
CRIIMI MAE receives a guaranteed return each year.
7
<PAGE>
ASSET MANAGEMENT
CRIIMI MAE is governed by a board of directors (the "CRIIMI MAE Board"), a
majority of whom are independent directors with extensive industry related
experience. The adviser to CRIIMI MAE and CRI Liquidating is CRI Insured
Mortgage Associates Adviser Limited Partnership (the "Adviser"), the general
partner of which is CRI and the operations of which are conducted by CRI's
employees. CRIIMI MAE's executive officers are senior executive officers of
CRI. The Adviser manages CRIIMI MAE's portfolio of Government Insured
Multifamily Mortgages and other assets with the goal of maximizing CRIIMI MAE's
value, and conducts CRIIMI MAE's day-to-day operations. Under an Advisory
Agreement between CRIIMI MAE and the Adviser, the Adviser and its affiliates
receive certain fees and expense reimbursementts
CRI is an international real estate investment firm which is currently ranked
as the sixth largest real estate asset manager in the United States.
Established in 1974, CRI offers capital, management and investment expertise to
developers, builders and both institutional and individual investors. CRI's 114
employees have been active in property acquisitions and dispositions, domestic
and foreign debt and equity placements, asset and property management and
leasing, structuring and sponsorship of real estate investment funds, and
management of real estate investment portfolios and REITs.
In its 20 years as an investor in, and manager of, debt and equity
investments in multifamily properties, CRI has used its expertise to assemble
one of the largest multifamily portfolios in the United States. As of December
31, 1993, CRI's multifamily portfolio, with an original cost of approximately
$3.9 billion, consisted of investments in approximately 100,000 apartment units
in approximately 720 multifamily properties located in 45 states. CRI also
invests in and manages commercial property. As of December 31, 1993, CRI's
commercial portfolio had an original cost of approximately $1.0 billion and
included 18 hotels, with a total of over 5,000 rooms, and five commercial
office buildings. Since its inception, CRI has raised over $2.4 billion of
capital to support its real estate investment activities.
INVESTMENT POLICIES
CRIIMI MAE's investment policies, which are overseen by the CRIIMI MAE Board,
are intended to foster CRIIMI MAE's objectives of providing stable or growing
quarterly cash distributions to its stockholders while preserving and
protecting its capital. CRIIMI MAE seeks to achieve these objectives by
investing primarily in Government Insured Multifamily Mortgages issued or sold
pursuant to programs sponsored by the FHA and GNMA. CRIIMI MAE's sources of
capital include borrowings, principal distributions received on its CRI
Liquidating Shares, principal proceeds of CRIIMI MAE mortgage dispositions and
proceeds from equity offerings. Beginning in early 1990, CRIIMI MAE commenced a
special acquisition program to buy FHA-insured and GNMA-guaranteed construction
loans. Although all periodic disbursements on such loans are FHA-insured or
GNMA-guaranteed, such loans generally carry higher interest rates than
permanent project loans largely because of the special expertise required to
handle many aspects of these loans, such as the dispersal of funds to
borrowers.
CRIIMI MAE seeks to enhance the return to its stockholders through the use of
leverage. Because CRIIMI MAE's mortgage investments are federally insured or
guaranteed, CRIIMI MAE has been able to arrange secured borrowings at interest
rates which the Adviser believes are attractive. These borrowings have been
invested in Government Insured Multifamily Mortgages with effective rates which
are higher than the interest rates payable on such borrowings. The Net Positive
Spread (as defined below) created by such leverage increases the return to
CRIIMI MAE stockholders. The Adviser continuously monitors CRIIMI MAE's
outstanding borrowings in an effort to ensure that CRIIMI MAE is making optimal
use of its borrowing ability based on market conditions and opportunities. Over
the past four years, the Adviser has reduced CRIIMI MAE's effective borrowing
rate through refinancings and net new financings and the Adviser continues to
evaluate opportunities to further reduce CRIIMI MAE's borrowing costs.
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CRIIMI MAE expects to continue to use leverage only to the extent that (i)
the proceeds therefrom will be used for investments such as CRIIMI MAE's
current portfolio of Government Insured Multifamily Mortgages or other high
quality assets including Other Insured Mortgages and Other Multifamily
Mortgages (as defined below); (ii) the risk of adverse changes in interest
rates is reduced by the use of hedging techniques such as those currently
employed by CRIIMI MAE; and (iii) the Adviser believes that after investing all
funds from any specific borrowing, a "Net Positive Spread" (the difference
between the yield on a mortgage investment acquired with borrowings and all
incremental borrowing and operating expenses on a tax basis associated with the
acquisition of such mortgage investment) of at least 40 basis points will be
achievable. However, CRIIMI MAE's use of leverage carries with it the risk that
the cost of its borrowings could increase relative to the return on CRIIMI
MAE's mortgage investments (due to (i) higher borrowing costs resulting from
increased interest rates and/or the expiration or termination of hedging
agreements, and/or (ii) a decrease in the yield on its mortgage investments
because of turnover in the portfolio), which could result in reduced net income
or a net loss and thereby reduce the return to CRIIMI MAE's stockholders.
It is CRIIMI MAE's policy to borrow only when the Net Positive Spread on the
borrowing is at least 40 basis points at inception of the borrowing. Such
policy provides that if Net Positive Spreads of at least 40 basis points are
not maintained, the annual and master servicing fees payable to the Adviser,
which are calculated as a percentage of invested assets, will be reduced so
that such fees, in basis points, equal the Net Positive Spread to investors, in
basis points. As of December 31, 1992 and 1993, CRIIMI MAE had a Net Positive
Spread of approximately 60 and 177 basis points, respectively, on its
borrowings. With respect to approximately $300 million of new borrowings
invested or committed for investment during 1993, as of December 31, 1993,
CRIIMI MAE had an average Net Positive Spread of approximately 250 basis
points.
CRIIMI MAE's secured financings require that its debt-to-equity ratio not
exceed 2.5:1. As of December 31, 1993, CRIIMI MAE's debt-to-equity ratio,
excluding approximately $41 million of borrowings committed for investment in
mortgages, was 2.2:1 and its debt-to-equity ratio, including such borrowings,
was 2.4:1. See "Recent Developments."
CRIIMI MAE's use of leverage carries with it the risk that the cost of its
borrowings could increase relative to the return on its Government Insured
Multifamily Mortgages, which could result in reduced net income or a net loss
and thereby reduce the return to stockholders. To partially limit the adverse
effects of rising interest rates, CRIIMI MAE has entered into a series of
interest rate hedging agreements in an aggregate notional amount approximately
equal to all of its outstanding borrowings and commitments. To the extent
CRIIMI MAE has not fully hedged its portfolio, in periods of rising interest
rates CRIIMI MAE's overall borrowing costs would increase with little or no
overall increase in mortgage investment income, resulting in returns to
stockholders that would be lower than those available if interest rates had
remained unchanged.
Borrowings by CRIIMI MAE generally are hedged by swap, cap or collar
agreements. Current interest rates are substantially lower than when CRIIMI MAE
entered into $165 million of its existing interest rate hedging agreements. As
a result of minimum interest rate levels associated with certain of these
hedging agreements, CRIIMI MAE incurred additional interest expense of $8.1
million and $8.6 million for the years ended December 31, 1992 and 1993,
respectively, of which approximately $1.3 million and $1.4 million,
respectively, was attributable to the swap agreement which was terminated in
December, 1993. Such existing hedging agreements expire in 1995. While there is
no assurance that any new arrangements will be made, the Adviser is actively
exploring alternatives to replace these hedging agreements when they expire in
order to capitalize on the current low interest rate environment.
Although CRIIMI MAE expects the overall duration of its mortgage investments
to exceed ten years, CRIIMI MAE's hedging agreements range in maturity from 3
to 10 years principally because of the limited availability and high cost of
instruments with maturities greater than 10 years. Thus, to the extent CRIIMI
MAE has not completely matched the duration of its existing mortgages to that
of its existing hedging agreements, upon the expiration of these hedging
agreements, CRIIMI MAE would be fully exposed to the
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<PAGE>
adverse effects of rising interest rates. The Adviser continues to actively
review asset/liability hedging techniques as CRIIMI MAE's existing hedging
agreements approach their expiration dates and to monitor the duration of its
hedging agreements relative to its assets.
A reduction in long-term interest rates could increase the level of
prepayments of CRIIMI MAE's Government Insured Multifamily Mortgages. CRIIMI
MAE's yield on mortgage investments will be reduced to the extent CRIIMI MAE
reinvests the proceeds from such prepayments in new mortgage investments with
effective rates which are below the effective rates of the prepaid mortgages.
CRIIMI MAE believes that declining interest rates result in increased
prepayments of single family mortgages to a greater extent than mortgages on
multifamily properties. This is partially due to lockouts (i.e. prepayment
prohibitions), prepayment penalties or difficulties in obtaining refinancing
for multifamily dwellings. Substantially all of CRIIMI MAE's and CRI
Liquidating's mortgage investments are subject to prepayment penalties or
prohibitions. However, because of current low interest rates and HUD's current
strategy of encouraging mortgagors to refinance high interest rate loans,
CRIIMI MAE may experience increased prepayment levels as compared to prior
years.
In addition, the fluctuation of long-term interest rates may affect the value
of CRIIMI MAE's Government Insured Multifamily Mortgages. Although decreases in
long-term rates could increase the value of CRIIMI MAE's existing mortgage
investments, increases in long-term rates could decrease the value of such
investments and, in certain circumstances, require CRIIMI MAE to pledge
additional collateral in connection with its borrowing facilities. This would
reduce CRIIMI MAE's borrowing capacity and, in an extreme case, may force
CRIIMI MAE to liquidate a portion of its assets at a loss in order to comply
with certain covenants under its financing facilities.
In addition to investing in FHA-Insured Loans and GNMA Securities, CRIIMI
MAE's investment policies also permit CRIIMI MAE to invest in Government
Insured Multifamily Mortgages which are not FHA-insured or GNMA-guaranteed
("Other Insured Mortgages") and in certain other mortgage investments which are
not federally insured or guaranteed ("Other Multifamily Mortgages"). Pursuant
to CRIIMI MAE's policy, at the time of their acquisition, Other Multifamily
Mortgages must have an expected yield of at least 150 basis points (1.5%)
greater than the yield on Government Insured Multifamily Mortgages which could
be acquired in the then current market and must meet certain other strict
underwriting guidelines. The CRIIMI MAE Board has adopted a policy limiting
Other Multifamily Mortgages to 20% of CRIIMI MAE's total consolidated assets.
As of December 31, 1993, CRIIMI MAE had not invested or committed to invest in
any Other Insured Mortgages or Other Multifamily Mortgages.
CRIIMI MAE is currently exploring opportunities in connection with the
sponsorship of securities offerings which involve the pooling of Other
Multifamily Mortgages to further enhance potential returns to CRIIMI MAE's
stockholders. Such sponsorship may also include the investment by CRIIMI MAE in
the non-investment grade or unrated tranches of mortgage pools having a high
current yield. As of December 31, 1993, CRIIMI MAE had not participated in the
sponsorship of any such securities offerings.
DESCRIPTION OF ASSETS
CRIIMI MAE has invested primarily in Government Insured Multifamily Mortgages
consisting of (i) FHA-Insured Loans and (ii) GNMA Securities. As of December
31, 1993, CRIIMI MAE owned directly 126 Government Insured Multifamily
Mortgages with an amortized cost of approximately $499 million, of which 46
were FHA-Insured Loans with an amortized cost of $152 million and 80 were GNMA
Securities with an amortized cost of approximately $347 million. As of December
31, 1993, the weighted average coupon rate of CRIIMI MAE's Government Insured
Multifamily Mortgages was approximately 8.4% and the weighted average maturity
thereof was approximately 34 years. See "Recent Developments."
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The National Housing Act authorizes the U.S. Department of Housing and Urban
Development ("HUD") to establish mortgage loan programs pursuant to which
mortgage loans on properties are insured in whole or in part by HUD. FHA is a
part of HUD and GNMA is a wholly owned corporate instrumentality of the United
States within HUD. These programs insure that the outstanding principal of, and
interest on, a loan, less certain specified deductions, will be paid by HUD if
the borrower defaults on the loan. The National Housing Act authorizes
different mortgage insurance programs based primarily upon types of real estate
for which mortgage loans may be obtained, maximum loan amounts permissible,
maturities of the mortgage loans, amortization schedules, rights of prepayment,
coinsurance and nature of the borrower.
All of the FHA-Insured Loans in which CRIIMI MAE invests are insured by HUD
for effectively 99% of their current face value. Upon default and subsequent
assignment to HUD, 90% of the face value of the mortgage is received by CRIIMI
MAE within approximately 90 days of assignment and 9% of the face value of the
mortgage is received upon final processing by HUD. In certain circumstances,
CRIIMI MAE may receive HUD debentures rather than cash in an amount equal to
99% of the face value of such mortgage upon final processing by HUD. The GNMA
Securities in which CRIIMI MAE invests are backed by FHA-Insured Loans. In the
event of a default of an FHA-Insured Loan underlying a GNMA Security, the
issuer or GNMA will make timely payments of principal and interest and pay 100%
of the GNMA Security's principal balance to CRIIMI MAE when such mortgage is
assigned to HUD and the issuer receives the insurance proceeds.
As part of its investment strategy, CRIIMI MAE also invests in FHA-Insured
Loans relating to the construction or rehabilitation of multifamily housing
projects, including nursing homes and intermediate care facilities ("Government
Insured Construction Mortgages"). Government Insured Construction Mortgages
involve a two-tier financing process in which a short-term loan covering
construction costs is converted into a permanent loan. CRIIMI MAE also becomes
the holder of the permanent loan upon conversion. The construction loan is
funded in HUD-approved draws based upon the progress of construction. The
construction draws are GNMA-guaranteed or insured by HUD. The construction loan
generally does not amortize during the construction period. Amortization begins
upon conversion of the construction loan into a permanent loan, which generally
occurs within a 24-month period from the initial endorsement by HUD.
Generally, Government Insured Multifamily Mortgages which are purchased near,
at or above par value ("Near Par or Premium Mortgage Investments") will result
in a loss if the mortgage investment is prepaid or assigned prior to maturity
because the amortized cost of the mortgage investment, including acquisition
costs, is approximately the same as or slightly higher than the insured amount
of the mortgage investment. As of December 31, 1993, substantially all of the
mortgage investments owned directly by CRIIMI MAE consisted of Government
Insured Multifamily Mortgages that are Near Par or Premium Mortgage
Investments. Based on current interest rates, the Adviser does not believe that
the prepayment, assignment, or sale of any of CRIIMI MAE's Government Insured
Multifamily Mortgages would result in a material financial statement or tax
basis gain or loss.
CRI Liquidating's mortgage investments consist solely of Government Insured
Multifamily Mortgages acquired from the CRIIMI Funds in the Merger. The CRIIMI
Funds invested primarily in Government Insured Multifamily Mortgages comprising
FHA-Insured Loans and GNMA Securities. As of December 31, 1993, CRI Liquidating
owned 63 Government Insured Multifamily Mortgages with an amortized cost of
approximately $192 million (which were accounted for at a fair value of $243
million), of which 61 were FHA-Insured Loans with an amortized cost of
approximately $187 million (which were accounted for at a fair value of $238
million) and two were GNMA Securities with an amortized cost of approximately
$5 million (which were accounted for at a fair value of $5 million). As of
December 31, 1993, the weighted average coupon rate of CRI Liquidating's
Government Insured Multifamily Mortgages was approximately 7.7% and the
weighted average maturity thereof was approximately 27 years.
The majority of CRI Liquidating's mortgage investments were acquired by the
CRIIMI Funds at a discount to face value ("Discount Mortgage Investments") on
the belief that based on economic, market,
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<PAGE>
legal and other factors, such Discount Mortgage Investments might be sold for
cash, prepaid as a result of a conversion to condominium housing or otherwise
disposed of or refinanced in a manner requiring prepayment or permitting other
profitable disposition three to twelve years after acquisition by the CRIIMI
Funds. Based on current interest rates, the Adviser expects that (i) the
disposition of most of CRI Liquidating's Government Insured Multifamily
Mortgages will result in a gain on a financial statement basis, and (ii) the
disposition of any of CRI Liquidating's Government Insured Multifamily
Mortgages will not result in a material loss on a financial statement basis and
will result in a gain on a tax basis.
CRI Liquidating's business plan calls for an orderly liquidation of
approximately 25% of its December 31, 1993 portfolio balance per year through
1997. On February 10, 1994, CRI Liquidating sold 12 Government Insured
Multifamily Mortgages with an amortized cost of approximately $37 million,
representing approximately 20% of its December 31, 1993 portfolio balance, for
a financial statement gain of approximately $11.7 million and a tax basis gain
of approximately $14.7 million.
RECENT DEVELOPMENTS
OFFERING OF COMMON STOCK; ACQUISITION OF MORTGAGES
In March 1994, CRIIMI MAE sold 5,000,000 shares of Common Stock in the
Offering pursuant to a Registration Statement on Form S-3 (Commission File No.
33-50679), for net proceeds to CRIIMI MAE of approximately $52 million.
As of April 6, 1994, CRIIMI MAE acquired 12 additional Government Insured
Multifamily Mortgages with an aggregate amortized cost of approximately $41.7
million, 3 of which are FHA-Insured Loans with an aggregate amortized cost of
approximately $20.3 million and 9 of which are GNMA Securities with an
aggregate amortized cost of approximately $21.4 million. As of April 6, 1994,
the weighted average coupon rate of such newly acquired Government Insured
Multifamily Mortgages was approximately 7.4% and the weighted average maturity
thereof was approximately 31.3 years. CRIIMI MAE funded such acquisitions with
a portion of the net proceeds from the Offering.
As of April 6, 1994 CRIIMI MAE also has commitments to acquire 4 additional
Government Insured Multifamily Mortgages with an aggregate amortized cost of
approximately $75.7 million, 2 of which are FHA-Insured Loans with an aggregate
amortized cost of approximately $19.6 million and 12 of which are GNMA
Securities with an aggregate amortized cost of approximately $56.1 million.
CRIIMI MAE intends to fund such commitments with the remaining net proceeds
from the Offering and with borrowings of approximately $65.4 million under
existing master repurchase agreements with Nomura Securities International,
Inc. and Nomura Asset Capital Corporation. The anticipated new borrowings will
be hedged by interest rate cap agreements with notional amounts of $35 million,
$50 million and $50 million, respectively, caps of 6.125%, 6.375% and 6.5%,
respectively, and expiration dates of February 2, 1999, March 15, 1997 and
March 25, 1998, respectively.
As of December 31, 1993, CRIIMI MAE had outstanding borrowings of
approximately $479 million, approximately $384 million of which was based on
three-month LIBOR and approximately $95 million of which was based on the 30-
day CP-rate. As of February 28, 1994, the $95 million of CP rate-based
borrowings was converted into three-month LIBOR-based borrowings. Of the
approximately $479 million in outstanding borrowings, approximately $314
million was hedged with cap agreements based on three-month LIBOR,
approximately $50 million was hedged with cap agreements based on the 30-day CP
rate and approximately $115 million was hedged with collar agreements based on
the 30-day CP rate. Between December 31, 1993 and April 7, 1994, three-month
LIBOR increased from 3.313% to 4.0%. This rise in three-month LIBOR will
increase CRIIMI MAE's interest expense and decrease Net Positive Spread with
respect to borrowings hedged by the cap agreements because the maximum interest
rates provided by the cap agreements are above current interest rates. However,
this increase in three-month LIBOR will not increase interest expense with
respect to borrowings which are hedged by collars because current interest
rates are still below the minimum interest rates provided by such collar
agreements. As of December 31, 1993, CRIIMI MAE also had cap agreements with a
notional amount of approximately $38 million to hedge borrowings anticipated to
fund mortgage commitments. See "CRIIMI MAE--Investment Policies."
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ISSUANCE OF WARRANTS TO PURCHASE COMMON STOCK
On March 22, 1990, a complaint was filed, on behalf of a class comprised of
certain limited partners of CRIIMI III and shareholders of CRIIMI II (the
"Plaintiffs"), in the Circuit Court for Montgomery County, Maryland against
CRIIMI MAE, CRI Liquidating, CRIIMI I and its general partner, CRIIMI II,
CRIIMI III and its general partner, CRI and William B. Dockser, H. William
Willoughby and Martin C. Schwartzberg (the "Defendants"). On November 18, 1993,
the Court entered an order granting final approval of the Settlement Agreement
between the Plaintiffs and the Defendants pursuant to which CRIIMI MAE will
issue to class members, including certain former limited partners of CRIIMI I,
up to 2.5 million Warrants, exercisable for 18 months after issuance, to
purchase shares of CRIIMI MAE Common Stock at an exercise price of $13.17 per
share. See "Description of Securities--Warrants." In addition, the settlement
included a payment of $1.4 million for settlement administration costs and the
Plaintiff's attorneys' fees and expenses. Insurance provided $1.15 million of
the $1.4 million cash payment, with the balance paid by CRIIMI MAE. CRIIMI MAE
accrued a total provision of $1.5 million in its consolidated statement of
income for the year ended December 31, 1993 for the uninsured portion of the
cash settlement paid by CRIIMI MAE and for the estimated value of the Warrants
that were expected to be issued as part of the settlement.
The number of Warrants to be issued is dependent on the number of class
members who submit proofs of claim by the Submission Date. Based on the proofs
of claim received as of April 1, 1994, CRIIMI MAE estimates that the maximum
number of Warrants to be issued pursuant to the Settlement Agreement will not
exceed 375,000.
The issuance of the Warrants pursuant to the Settlement Agreement will have
no impact on CRIIMI MAE's tax basis income. Based on the Adviser's initial
estimate of the number of Warrants to be issued, CRIIMI MAE accrued a total
provision of $1.5 million (which included the uninsured portion of the cash
settlement) in its consolidated statement of income for the year ended December
31, 1993. Based on the proofs of claim received as of April 1, 1994, and CRIIMI
MAE's estimate of the maximum number of Warrants to be issued pursuant to the
Settlement Agreement, CRIIMI MAE has reduced the provision to $1.0 million,
which provision may be further adjusted once the actual number of Warrants to
be issued is finally determined. The Adviser estimates that the final charge
(after adjustments to the provision) to net income and the increase in the
number of shares of Common Stock outstanding as a result of the exercise of the
Warrants will not have a material adverse effect on CRIIMI MAE's net income and
net income per share. The exercise of the Warrants will not result in a charge
to CRIIMI MAE's tax basis income. Further, the Adviser believes that the
exercise of the Warrants will not have a material adverse effect on CRIIMI
MAE's tax basis income per share or annualized cash dividends per share because
CRIIMI MAE intends to invest the proceeds from any exercise of the Warrants in
accordance with its investment policy to purchase Government Insured
Multifamily Mortgages and other authorized investments. However, in the case of
a significant decline in the yield on mortgage investments and a significant
decrease in the Net Positive Spread which CRIIMI MAE could achieve on its
borrowings, the exercise of the Warrants may have a dilutive effect on tax
basis income per share and cash dividends per share. Receipt of the proceeds
from the exercise of the Warrants will increase CRIIMI MAE's shareholders'
equity.
DESCRIPTION OF SECURITIES
COMMON AND PREFERRED STOCK
The Shares offered hereby are shares of CRIIMI MAE's Common Stock. The
following description of the Common Stock is summarized from relevant portions
of CRIIMI MAE's Articles of Incorporation and Bylaws, as amended. A more
complete description of the Common Stock may be obtained by reference to such
documents and to the documents incorporated by reference in this Prospectus.
The following statements are qualified in their entirety by such reference.
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Stockholders are entitled to one vote for each share of Common Stock held on
all matters presented for a vote to stockholders. The CRIIMI MAE Board serves
in staggered three-year terms. Directors may be removed only for cause, upon
the affirmative vote of holders of a majority of the Common Stock voting
together as a single class. Except as otherwise provided in the Articles of
Incorporation, in meetings where a quorum is present, a majority of the votes
cast by stockholders is required to adopt a provision. Stockholders are
entitled to receive all assets available for distribution to the stockholders,
subject to any preferential rights of the holders of any preferred shares. The
shares of Common Stock, when issued, will be fully paid and nonassessable and
will not be subject to redemption, except as provided in the Articles of
Incorporation, nor will they have any preference, conversion, exchange,
preemptive or cumulative voting rights.
The authorized capital stock of CRIIMI MAE comprises 60 million shares of
Common Stock, par value $.01 per share, and 25 million shares of preferred
stock, $.01 per share ("Preferred Stock"). As of April 7, 1994, there were
issued and outstanding approximately 25 million shares of Common Stock and no
shares of Preferred Stock. The Common Stock is currently listed and is trading
on the NYSE, and CRIIMI MAE will seek to list with the NYSE the Shares offered
hereby.
The transfer agent and registrar for the Common Stock is the Registrar and
Transfer Company.
WARRANTS
The Shares offered hereby are issuable upon the exercise of Warrants to be
issued pursuant to the Settlement Agreement. See "Recent Developments--Issuance
of Warrants to Purchase Common Stock." Upon issuance, the Warrants will be
subject to a Warrant Agreement between the Registrar and Transfer Company, as
warrant agent (the "Warrant Agent"), and CRIIMI MAE (the "Warrant Agreement").
The Warrants will be evidenced by warrant certificates, a form of which is
attached as an exhibit to the Warrant Agreement (the "Warrant Certificate"). A
copy of the Warrant Agreement (including the Warrant Certificate) is filed as
an exhibit to the Registration Statement of which this Prospectus is a part.
The following summary of certain provisions of the Warrant Agreement and the
Warrant Certificate do not purport to be complete and are subject to, and
qualified in their entirety by reference to, the provisions of the Warrant
Agreement and the Warrant Certificate, including the definitions therein of
certain terms.
RIGHTS TO PURCHASE COMMON STOCK
Upon issuance, each Warrant will entitle the registered owner thereof
("Warrantholder") to purchase one share of Common Stock at $13.17 per share at
any time before 5:00 p.m., New York City time, on the day which is 547 days
from the date of issuance of the Warrants. The price per share at which a
Warrantholder may purchase one Share upon exercise of a Warrant, as well as the
number of Shares purchasable upon exercise of a Warrant, are subject to
adjustment in certain events ("Adjustments"). The price per Share at which a
Warrantholder may purchase one Share upon exercise of a Warrant, as so adjusted
from time to time, is referred to as the "Exercise Price."
Warrant Certificates will be issued in registered form. Each Warrantholder
may exercise Warrants by surrendering to the Warrant Agent the Warrant
Certificate evidencing such Warrants, with the form of election to exercise all
or a portion of the Warrants evidenced thereby duly filled in and signed,
together with payment of the Exercise Price and any applicable transfer tax.
Payment of the Exercise Price may be made in the form of United States currency
or check payable in United States currency to the order of the Warrant Agent.
As soon as practicable after the exercise of any Warrants and payment of the
aggregate Exercise Price therefor and any applicable transfer tax, the Warrant
Agent will deliver, to or upon the order of the exercising Warrantholder,
certificates representing the number of Shares of Common Stock so purchased,
registered in such name or names as may be directed by the Warrantholder. If
less than all of the Warrants evidenced by a Warrant Certificate are exercised,
a new Warrant Certificate will be issued for the remaining number of Warrants.
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Shares of Common Stock issuable upon exercise of the Warrants are being
registered with the SEC under the Registration Statement of which this
Prospectus is a part. However, the Warrants have not been, and will not be
registered with the SEC and are not being offered pursuant to this Prospectus.
ADJUSTMENTS
The Exercise Price and the number of Shares of Common Stock to be issued upon
the exercise of each Warrant are subject to adjustment in certain events,
including (a) the declaration of a distribution on Common Stock payable in
Common Stock, (b) the subdivision or combination of outstanding shares of
Common Stock, (c) the issuance of stock in the reclassification of Common
Stock, or (d) the distribution to all stockholders of evidence of indebtedness
or assets (excluding cash distributions payable in the ordinary course of
business or distributions payable in Common Stock) or subscription rights or
warrants. No adjustment will be required until cumulative adjustments require
an adjustment in the Exercise Price of at least $.25; however, any such
adjustment not required to be made and not made will be carried forward and
taken into account in any subsequent adjustment.
Notwithstanding the foregoing, in case of a reorganization, consolidation
(excluding a consolidation in which CRIIMI MAE is the surviving entity) or sale
to another entity of all or substantially all of CRIIMI MAE's assets,
Warrantholders upon exercise of Warrants shall have the right to receive, in
lieu of each share of Common Stock deliverable upon exercise prior thereto,
only the kind and amount of corresponding shares or other securities or
property or cash receivable upon such reorganization, consolidation or sale.
Furthermore, no adjustments will be made to the Exercise Price or to the number
of shares of Common Stock purchasable upon the exercise of Warrants in
connection with the grant of options to CRIIMI MAE's employees.
MODIFICATION OF THE WARRANT AGREEMENT
The Warrant Agreement contains provisions permitting CRIIMI MAE and the
Warrant Agent, without consent or concurrence of any Warrantholder, to
supplement or amend the Warrant Agreement to cure any ambiguity, manifest error
or other mistake contained therein, or to make provision in regard to any
matter or questions arising thereunder which CRIIMI MAE and the Warrant Agent
deem necessary or desirable, provided such changes do not adversely affect,
alter or change the interests of the Warrantholders.
NOTICES
CRIIMI MAE will provide notice to each Warrantholder of any adjustment in the
Exercise Price. In addition, CRIIMI MAE is required to notify Warrantholders of
certain proposed actions, including (i) the issuance to all stockholders of
evidence of indebtedness or assets (excluding cash distributions payable in the
ordinary course of business or distributions payable in Common Stock) or
subscription rights or warrants, (ii) any consolidation or merger requiring the
approval of any stockholder or a reorganization or the conveyance of
substantially all of CRIIMI MAE's assets, or (iii) a dissolution, liquidation
or winding up of CRIIMI MAE.
MARKET FOR WARRANTS
There can be no assurance that an active trading market for the Warrants will
develop. It is not expected that the Warrants will be listed on the NYSE or on
any other exchange or that the Warrants will be quoted on NASDAQ.
OTHER MATTERS
Warrantholders will not be entitled, by virtue of their status as such, to
any of the rights of a stockholder of CRIIMI MAE, including, without
limitation, the right to vote, to receive distributions or to attend or receive
any notice of stockholders' meetings or any other CRIIMI MAE proceedings.
Warrant Certificates may be transferred or exchanged for certificates
representing in the aggregate a like number of Warrants.
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THE OFFERING
CRIIMI MAE is offering 375,000 Shares of Common Stock, subject to adjustment
in certain circumstances, issuable upon the exercise of Warrants. The Exercise
Price of the Warrants, also subject to adjustment in certain circumstances, is
$13.17 per share of Common Stock. See "Description of Securities--Warrants."
All of the Shares of Common Stock offered hereby are being issued and sold by
CRIIMI MAE. CRIIMI MAE is registering the Shares underlying the Warrants
pursuant to the Settlement Agreement. Expenses of the offering, estimated to be
approximately $100,000, will be paid in full by CRIIMI MAE.
USE OF PROCEEDS
Assuming Warrants representing the right to purchase 375,000 Shares of Common
Stock are exercised at an Exercise Price of $13.17 per share of Common Stock,
the net proceeds from the sale of the Shares offered hereby are estimated to be
approximately $4.8 million after deducting estimated offering expenses. CRIIMI
MAE intends to use any such proceeds for general corporate purposes, including,
without limitation, working capital.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is traded on the NYSE under the symbol CMM. The table below
sets forth the high and the low closing sales price per share of the Common
Stock as reported on the NYSE Composite Tape and the amount of cash dividends
paid per share of Common Stock during the periods indicated. The reported last
sale price of the Common Stock on the NYSE Composite Tape on April 7, 1994 was
$10.50 per share. As of March 14, 1994, there were approximately 23,000 holders
of record of Common Stock.
<TABLE>
<CAPTION>
PRICE RANGE
OF COMMON STOCK DIVIDENDS
--------------- PAID PER
HIGH LOW SHARE
<S> <C> <C> <C>
Year Ended December 31, 1992:
1st Quarter......................................... $ 9 1/2 $ 8 7/8 $0.27
2nd Quarter......................................... 9 1/2 8 3/4 0.27
3rd Quarter......................................... 9 7/8 9 3/8 0.27
4th Quarter......................................... 10 9 1/4 0.27
Year Ended December 31, 1993:
1st Quarter......................................... $11 1/4 $ 9 7/8 $0.28
2nd Quarter......................................... 11 5/8 10 3/4 0.28
3rd Quarter......................................... 12 3/8 11 1/4 0.28
4th Quarter......................................... 12 5/8 11 0.28
Year Ending December 31, 1994:
1st Quarter......................................... 12 9 3/8 $0.29
2nd Quarter (through April 7, 1994)................. 10 1/2 9 3/4 --
</TABLE>
See the cover page of this Prospectus or of the Prospectus Supplement, if
any, accompanying this Prospectus for the last sales price of the Common Stock
reported on the NYSE Composite Tape as of a recent date.
16
<PAGE>
CONSOLIDATED SELECTED FINANCIAL DATA
The following consolidated selected financial data of CRIIMI MAE has been
derived from the audited consolidated financial statements of CRIIMI MAE. This
data is qualified in its entirety by the detailed information and financial
statements included in the documents incorporated herein by reference. See
"Incorporation of Certain Documents by Reference." In addition, see "Recent
Developments" for a discussion of developments affecting financial data since
December 31, 1993. Additional consolidated selected financial data may be set
forth in a Prospectus Supplement.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1989(A) 1990 1991 1992 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF INCOME DATA:
INCOME:
<S> <C> <C> <C> <C> <C> <C> <C>
Mortgage investment
income................ $ 40,008 $ 50,039 $ 49,323 $ 45,931 $ 50,270
Other income........... 2,647 4,991 4,995 4,771 6,180
-------- -------- -------- -------- --------
Total income.......... 42,655 55,030 54,318 50,702 56,450
<CAPTION>
EXPENSES:
<S> <C> <C> <C> <C> <C> <C> <C>
Interest expense....... 1,136 22,346 25,791 24,392 28,008
Termination of interest
rate swap............. -- -- -- -- 4,890
Other operating
expenses.............. 2,560 3,182 3,752 3,505 4,639
Fees to related party.. 1,839 2,544 2,325 2,238 2,715
Provision for
settlement of
litigation............ -- -- -- -- 1,500
-------- -------- -------- -------- --------
Total expenses........ 5,535 28,072 31,868 30,135 41,752
-------- -------- -------- -------- --------
Income before mortgage
dispositions, gain on
sale of shares of
subsidiary, loss on
investment in limited
partnership,
nonrecurring merger
costs and minority
interests............. 37,120 26,958 22,450 20,567 14,698
Net gains from mortgage
dispositions.......... 2,958 3,794 4,048 5,733 7,358
Gain on sale of shares
of subsidiary......... -- -- -- -- 3,281
Loss on investment in
limited partnership... -- -- -- (732) --
Non-recurring merger
costs................. (9,561) -- -- -- --
Minority interests..... (10,977) (12,379) (10,855) (9,527) (9,580)
-------- -------- -------- -------- --------
Income before
extraordinary loss.... 19,540 18,373 15,643 16,041 15,757
Extraordinary loss from
extinguishment of
debt.................. -- -- (6,642) -- --
-------- -------- -------- -------- --------
Net income............. $ 19,540 $ 18,373 $ 9,001(b) $ 16,041 $ 15,757
======== ======== ======== ======== ========
Net income per share... $ 0.95 $ 0.91 $ 0.45(b) $ 0.79 $ 0.78
======== ======== ======== ======== ========
Weighted average shares
outstanding........... 20,567 20,184 20,184 20,184 20,184
Tax basis income....... $ 26,987 $ 22,276 $ 22,037 $ 21,626 $ 23,015
Tax basis income per
share................. 1.31 1.10 1.09 1.07 1.14
Dividends per share.... 1.49(c) 1.08 1.08 1.08 1.12
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------------------
1989 1990 1991 1992 1993
(IN THOUSANDS)
BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Investment in mortgages
(excludes mortgages
held for disposition). $456,692 $546,448 $446,703 $448,319 $730,265(d)
Total assets........... 502,530 602,786 546,054 526,667 808,701
Total debt............. 139,426 264,605 245,555 247,968 479,045
Shareholders' equity... 223,472 211,195 198,397 193,109 215,289(d)
</TABLE>
- --------
(a) All financial information of CRIIMI MAE for the periods prior to the Merger
on November 27, 1989 has been presented in a manner similar to a pooling of
interests, which effectively combines the historical results of the CRIIMI
Funds. The dividends and net income per share amounts for the year ended
December 31, 1989 have been restated based upon the weighted average shares
outstanding as if the Merger had been consummated on January 1, 1989.
(b) Includes recognition of an extraordinary loss of approximately $6.6 million
($0.33 per share) resulting from the refinancing of certain notes payable.
(c) This amount does not include the special dividend of $2.31 per share paid
to CRIIMI MAE stockholders of record on November 27, 1989.
(d) Includes net unrealized gain on mortgage investments of CRI Liquidating of
approximately $29.0 million, due to the implementation of Statement of
Financial Accounting Standards No. 115 "Accounting for Certain Investments
in Debt and Equity Securities" as of December 31, 1993.
17
<PAGE>
CERTAIN UNITED STATES TAX CONSIDERATIONS
The following general discussion is a summary of certain U.S. federal income
and estate tax consequences of the ownership and disposition of the Shares
applicable to holders of such Shares who acquire and own such Shares as capital
assets within the meaning of Section 1221 of the Internal Revenue Code of 1986,
as amended (the "Code"). For purposes of this discussion, a "Non-U.S. Holder"
is a person other than (i) a citizen or resident of the United States, (ii) a
corporation or partnership created or organized in the United States or under
the laws of the United States or of any state, or (iii) an estate or trust
whose income is includable in gross income for United States federal income tax
purposes regardless of its source. For purposes of the withholding tax on
dividends discussed below, a non-resident fiduciary of an estate or trust will
be considered a Non-U.S. Holder.
This discussion does not consider specific facts and circumstances that may
be relevant to a particular holder's tax position (including the fact that, in
the case of a Non-U.S. Holder that is a partnership, the U.S. tax consequences
of holding and disposing of Shares may be affected by certain determinations
made at the partner level), and does not consider U.S. state and local or non-
U.S. tax consequences. Furthermore, the following discussion is based on
provisions of the Code and administrative and judicial interpretations, all of
which are subject to change, possibly on a retroactive basis. Each prospective
holder of Shares is urged to consult a tax advisor with respect to the U.S.
federal tax consequences of holding and disposing of the Shares, as well as any
tax consequences that may arise under the laws of any U.S. state, local or
other U.S. or non-U.S. taxing jurisdiction.
GENERAL CONSIDERATIONS
CRIIMI MAE and CRI Liquidating have qualified, and intend to continue to
qualify, as REITs under the Code. Qualification for treatment as a REIT
requires CRIIMI MAE and CRI Liquidating each to meet certain criteria including
certain requirements regarding the nature of its ownership, assets, income and
distributions of taxable income. A REIT generally is not subject to federal
income tax on that portion of its ordinary income or capital gains that is
distributed currently to stockholders. CRIIMI MAE and CRI Liquidating have
distributed and intend to continue to distribute substantially all of their
taxable income to stockholders and to meet distribution requirements to
continue to qualify as REITs. CRIIMI MAE and CRI Liquidating will each
generally be subject to federal income tax at normal corporate rates on its
undistributed income and to a 4% excise tax under the Code on the amount, if
any, by which 85% of its REIT taxable income (including accrued but unpaid
interest income) and 95% of any net capital gain exceed the amount actually
distributed to its stockholders during the year (or declared as a dividend
during October, November or December of a calendar year, if distributed during
the following January as ordinary income dividends). Accrued income for each
quarter is generally received within 30 days after the end of the quarter.
CRIIMI MAE and CRI Liquidating are not aware of any present circumstances that
would cause them to fail to qualify as REITs, nor do they anticipate any such
circumstances in the reasonably foreseeable future. If the U.S. Internal
Revenue Service ("IRS") successfully challenged the tax status of CRIIMI MAE or
CRI Liquidating as a REIT, CRIIMI MAE and CRI Liquidating's earnings would
become subject to federal income tax (including any applicable minimum tax) at
corporate rates.
To protect CRIIMI MAE's qualification as a REIT under the Code, CRIIMI MAE's
articles of incorporation provide that no person or persons acting as a group
(defined to include partnerships, corporations, trusts and other entities),
with the exceptions of CRI or its affiliates, shall at any time directly or
indirectly acquire ownership of more than 9.8% of the outstanding shares of
CRIIMI MAE's Common Stock.
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS
As long as CRIIMI MAE qualifies as a REIT, distributions made to CRIIMI MAE's
taxable domestic stockholders out of current or accumulated earnings and
profits, as determined for federal income tax
18
<PAGE>
purposes, and not designated as capital gain dividends, will be taken into
account by such stockholders as ordinary income and will not be eligible for
the dividends received deduction for stockholders that are corporations.
Distributions that are designated by CRIIMI MAE as capital gain dividends will
be taxed as long-term capital gains (to the extent that they do not exceed
CRIIMI MAE's actual net capital gain for the taxable year) without regard to
the period for which the stockholder has held its Shares. However, corporate
stockholders may be required to treat up to 20% of certain capital gain
dividends as ordinary income. To the extent that CRIIMI MAE makes distributions
in excess of current and accumulated earnings and profits as determined for
federal income tax purposes, these distributions are treated first as a tax-
free return of capital to the stockholder, reducing the tax basis of a
stockholder's Shares by the amount of such distribution (but not below zero),
with distributions in excess of the stockholder's tax basis taxable as gain
from the sale or exchange of Shares. In addition, any dividend declared by
CRIIMI MAE in October, November or December of any year and payable to a
stockholder of record on a specific date in any such month shall be treated as
both paid by CRIIMI MAE and received by the stockholder on December 31 of such
year, provided that the dividend is actually paid by CRIIMI MAE during January
of the following calendar year. Stockholders may not include in their
individual income tax returns any net operating losses or capital losses of
CRIIMI MAE.
In general, any loss upon a sale or exchange of Shares by a stockholder who
has held such Shares for six months or less (after applying certain holding
period rules) will be treated as a long-term capital loss, to the extent of
distributions from CRIIMI MAE required to be treated by such shareholder as
long-term capital gains.
TAXATION OF NON-U.S. HOLDERS
In general, distributions to a Non-U.S. Holder of Shares which are not
attributable to gain from the sale or exchange of United States real property
interests and are not designated by CRIIMI MAE as capital gain dividends will
be treated as dividends of ordinary income (to the extent of earnings and
profits for U.S. federal income tax purposes). Such distributions ordinarily
will be subject to withholding of U.S. federal income tax at a 30% rate, unless
such rate is reduced by an applicable income tax treaty. Dividends that are
effectively connected with such holder's conduct of a trade or business in the
United States or, if a tax treaty applies, attributable to a permanent
establishment in the United States ("U.S. trade or business income") generally
are subject to U.S. federal income tax at regular rates (and, in the case of a
Non-U.S. Holder that is a corporation, under certain circumstances may be
subject to an additional "branch profits tax" at a 30% rate or such lower rate
as may be applicable under an income tax treaty), but are not generally subject
to the 30% withholding tax if the Non-U.S. Holder files the appropriate form
with the payer.
Distributions by CRIIMI MAE which are not dividends out of earnings and
profits (as determined for U.S. federal income tax purposes) should not be
subject to U.S. withholding tax. Such distributions are treated first as a tax-
free return of capital to the Non-U.S. Holder, reducing the tax basis of the
Non-U.S. Holder's Shares by the amount of such distribution (but not below
zero), with distributions in excess of the Non-U.S. Holder's tax basis taxable
(to the same extent described below) as a sale or exchange of Shares. If it
cannot be determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the entire amount of the distribution will be subject to withholding at the
rate applicable to dividends. However, the Non-U.S. Holder may seek a refund of
such amounts from the IRS if it is subsequently determined that such
distribution was, in fact, in excess of current and accumulated earnings and
profits of CRIIMI MAE. CRIIMI MAE does not expect to pay dividends in excess of
current and accumulated earnings and profits.
Under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), for
as long as CRIIMI MAE qualifies as a REIT, a distribution made by CRIIMI MAE to
a Non-U.S. Holder that is attributable to gains from the sale or exchange of
U.S. real property interests generally will be taxable as U.S. trade or
business income. Therefore, Non-U.S. Holders generally will be taxed at the
capital gain rates applicable to U.S. Holders (subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of
nonresident alien individuals). Distributions subject to FIRPTA also may be
subject to a 30% branch
19
<PAGE>
profits tax in the hands of a corporate Non-U.S. Holder (unless reduced or
eliminated by treaty). In addition, CRIIMI MAE will be required to withhold
U.S. tax equal to 35% of the amount of dividends that could have been
designated as capital gain dividends, but such requirement apparently is
limited to the amount of such gain that is attributable to the sale or exchange
of U.S. real property interests. The amount so withheld is creditable against
the U.S. federal income tax liability of such Non-U.S. Holder and a refund may
be available if the amount withheld exceeds the U.S. federal income tax
liability of the Non-U.S. Holder. CRIIMI MAE does not expect to realize any
capital gains from CRI Liquidating's investments in the Participations. CRIIMI
MAE believes that any gains on its mortgage investments would not be subject to
FIRPTA because such mortgages merely secure a debt and CRIIMI MAE will not be
entitled to a direct or indirect right to share in the appreciation in the
value of, or in the gross or net proceeds or profits generated by, the
underlying real property.
If CRIIMI MAE is a "domestically controlled REIT," a sale of Shares by a Non-
U.S. Holder generally will not be subject to U.S. taxation under FIRPTA. A REIT
is a domestically controlled REIT if, at all times during a specified testing
period, less than 50% in value of its shares is held directly or indirectly by
Non-U.S. Holders. CRIIMI MAE is currently, and anticipates continuing to be, a
domestically controlled REIT. Therefore, it anticipates that a Non-U.S.
Holder's sale of Shares will not be subject to taxation under FIRPTA. Because
the Shares will be publicly traded, however, no assurance can be given that
CRIIMI MAE will continue to be a domestically controlled REIT.
If CRIIMI MAE does not constitute a domestically controlled REIT, a Non-U.S.
Holder's sale of Shares nevertheless generally will not be subject to tax under
FIRPTA provided that either (i) CRIIMI MAE is not a "United States real
property holding corporation" (which is defined in the Code generally as any
corporation if the net fair market value of its U.S. real property interests
accounts for 50% or more of the net fair market value of its assets at any time
during the 5-year period prior to such sale), or (ii) the shares are "regularly
traded" (as defined by applicable Treasury regulations) on an established
securities market (e.g., the New York Stock Exchange, on which the Shares are
listed), and the selling Non-U.S. Holder held 5% or less of CRIIMI MAE's
outstanding shares at all times during a specified testing period.
If gain on the sale of the Shares by a non-U.S. Holder is subject to taxation
under FIRPTA, the income would be taxable as U.S. trade or business income
(subject to applicable alternative minimum tax and a special alternative
minimum tax in the case of nonresident alien individuals). Even if FIRPTA does
not apply to the sale of the Shares, a Non-U.S. Holder that owns the Shares as
a capital asset nonetheless will be subject to U.S. federal income tax on any
gain realized on the sale of Shares if (i) such gain is U.S. trade or business
income, (ii) in the case of gain realized by an individual Non-U.S. Holder,
such Non-U.S. Holder is present in the United States for 183 days or more
during the year of such sale and certain other conditions are met, or (iii) the
Non-U.S. Holder is taxed under rules applicable to certain U.S. expatriates.
In general, an individual who is a Non-U.S. Holder for U.S. estate tax
purposes will incur liability for U.S. federal estate tax if the fair market
value of the property included in such individual's taxable estate for U.S.
federal estate tax purposes exceeds the statutory threshold amount. For these
purposes, Shares owned or treated as owned by an individual who is a Non-U.S.
Holder (for U.S. estate tax purposes) at the time of death will be included in
the individual's taxable estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.
TAXATION OF TAX-EXEMPT STOCKHOLDERS
The IRS has issued a revenue ruling in which it held that amounts distributed
by a REIT to a tax-exempt employee pension trust do not constitute unrelated
business taxable income ("UBTI"). Revenue rulings, however, are interpretive in
nature and are subject to revocation or modification by the IRS. Based upon the
ruling and the analysis therein, distributions by CRIIMI MAE to a stockholder
that is a tax-exempt entity also should not constitute UBTI, provided that the
tax-exempt entity has not financed the acquisition of its Shares with
"acquisition indebtedness" within the meaning of the Code, and that the Shares
are not otherwise used in an unrelated trade or business of the tax-exempt
entity.
20
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY CRIIMI MAE. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHO-
RIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED
TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICI-
TATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information...................................................... 2
Incorporation Of Certain Documents By Reference............................ 2
Prospectus Summary......................................................... 3
CRIIMI MAE................................................................. 7
Recent Developments........................................................ 12
Description of Securities.................................................. 13
The Offering............................................................... 16
Use of Proceeds............................................................ 16
Price Range of Common Stock and Dividends.................................. 16
Consolidated Selected Financial Data....................................... 17
Certain United States Tax Considerations................................... 18
Legal Matters.............................................................. 21
Experts.................................................................... 21
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
375,000 SHARES
CRIIMI MAE INC.
[LOGO OF CRIIMI MAE INC. APPEARS HERE]
COMMON STOCK
------------------
PROSPECTUS
------------------
, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All of the expenses set forth below, except the SEC registration fee, are
estimated.
<TABLE>
<S> <C>
SEC registration fee............................................. $ 1,704
Printing expenses................................................ 50,000
Accounting fees and expenses..................................... 10,000
Legal fees and expenses.......................................... 34,000
Blue Sky fees and expenses (including legal fees)................ 4,000
Miscellaneous.................................................... 0
-------
Total........................................................ $99,704
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Maryland law, a corporation formed under Maryland law is permitted to
limit, by provisions in its articles of incorporation, the liability of its
directors and officers to the corporation or its stockholders for money damages
except for (i) actual receipt of an improper benefit or profit in money,
property or services or (ii) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. CRIIMI MAE's Articles
of Incorporation include such a provision which limits such liability to the
fullest extent permitted by Maryland law.
CRIIMI MAE's Bylaws provide that CRIIMI MAE shall indemnify its directors,
officers and adviser, and may indemnify other persons who may be indemnified,
to the fullest extent permitted by Maryland law against any liability and
related expenses (including attorneys' fees) incurred in conjunction with any
proceeding or threatened proceeding in which any of them may be involved, or
threatened to be involved, as a party or otherwise, arising out of or
incidental to CRIIMI MAE's business. CRIIMI MAE has purchased and maintains
liability insurance against liabilities that may be asserted against such
persons in connection with CRIIMI MAE, whether or not indemnification against
such liabilities would be permitted under the provisions of CRIIMI MAE's
Articles of Incorporation.
Section 2-418 of the General Corporation Law of the State of Maryland
provides, together with the Bylaws described above, for the indemnification of
directors, officers and other corporate agents in terms sufficiently broad to
indemnify such persons, under certain circumstances, for liabilities (including
reimbursements of expenses incurred) arising under the Securities Act.
ITEM 16. EXHIBITS
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
*4.1 --Articles of Incorporation, as amended, of CRIIMI MAE Inc.
*4.2 --Bylaws, as amended, of CRIIMI MAE Inc.
5 --Opinion of Arent Fox Kintner Plotkin & Kahn regarding validity of
securities being registered.
8 --Tax Opinion of Arent Fox Kintner Plotkin & Kahn (included in Exhibit 5)
10.1 --Form of Warrant Agreement (including form of Warrant Certificate).
23.1 --Consent of Arthur Andersen & Co.
23.2 --Consent of Arent Fox Kintner Plotkin & Kahn (included in Exhibit 5).
24 --Power of Attorney (included on signature page)
</TABLE>
- --------
* Incorporated herein by reference to CRIIMI MAE's Registration Statement on
Form S-3 (File No. 33-50679).
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned hereby undertakes: (1) To file, during any period in which
offers or sales are being made, a post-effective amendment to this registration
statement 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; and (2) 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 also 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 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. If a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes that: (1) For purposes of
determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the time it was
declared effective; and (2) For the purpose of determining any liability under
the Securities Act, each post-effective amendment that contains a form of
prospectus 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 THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF ROCKVILLE, STATE OF MARYLAND, ON THE 6TH DAY OF
APRIL, 1994.
Criimi Mae Inc.
By: /s/ William B. Dockser
-----------------------------
William B. Dockser
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William B. Dockser and H. William Willoughby,
and each of them severally, as his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place, and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or of his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ William B. Dockser Chairman of the Board April 6, 1994
- ------------------------------------ (Principal Executive
William B. Dockser Officer and Director)
/s/ H. William Willoughby Director, President and April 6, 1994
- ------------------------------------ Secretary
H. William Willoughby
Director
- ------------------------------------
Garrett G. Carlson
/s/ G. Richard Dunnells Director April 6, 1994
- ------------------------------------
G. Richard Dunnells
Director
- ------------------------------------
Robert F. Tardio
/s/ Elizabeth O. Flanagan Chief Financial Officer April 6, 1994
- ------------------------------------ (Principal Financial and
Elizabeth O. Flanagan Accounting Officer)
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
------- ----------- ----------
<C> <S> <C>
*4.1 --Articles of Incorporation, as amended, of CRIIMI MAE
Inc.
*4.2 --Bylaws, as amended, of CRIIMI MAE Inc.
5 --Opinion of Arent Fox Kintner Plotkin & Kahn regarding
validity of securities being registered.
8 --Tax Opinions of Arent Fox Kintner Plotkin & Kahn
(included in Exhibit 5)
10.1 --Form of Warrant Agreement (including form of Warrent
Certificate).
23.1 --Consent of Arthur Andersen & Co.
23.2 --Consent of Arent Fox Kintner Plotkin & Kahn (included
in Exhibit 5).
24 --Power of Attorney (included in signature page)
</TABLE>
- --------
* Incorporated herein by reference to CRIIMI MAE's Registration Statement on
Form S-3 (File No. 33-50679).
<PAGE>
April 6, 1994
The Board of Directors
CRIIMI MAE Inc.
The CRI Building
11200 Rockville Pike
Rockville, Maryland
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
We have acted as counsel to CRIIMI MAE Inc., a Maryland corporation (the
"Company"), with respect to the Company's Registration Statement on Form S-3
(the "Registration Statement") filed with the Securities and Exchange
Commission, in connection with the registration under the Securities Act of
1933, as amended, of 375,000 shares of the Company's Common Stock, par value
$.01 per share (the "Shares").
As counsel to the Company, we have examined the Company's Articles of
Incorporation and such Company records, certificates and other documents and
relevant statutes, regulations, published rulings and such questions of law as
we considered necessary or appropriate for the purpose of this opinion. The
actual method of operation of the Company to date and the proposed continuing
method of operation of the Company, as set forth in the Prospectus (included in
the Registration Statement), have also been reviewed.
In our examination, we have assumed the authenticity of original documents, the
accuracy of copies and the genuineness of signatures. We have relied upon the
representations and statements of officers and other representatives of the
Company with respect to the factual determinations underlying the legal
conclusions set forth herein. We have not attempted to verify independently
such representations and statements.
When issued and sold in accordance with the terms of the Warrant Agreement (as
defined in the Registration Statement), the Shares will be legally issued, fully
paid and nonassessable.
If the Company continues to operate in the manner in which it has to date, and
if the Company is operated according to the policies and in the manner stated in
Prospectus (included in the Registration Statement), the Company will continue
to qualify as a Real Estate Investment Trust pursuant to the Internal Revenue
Code of 1986. We have reviewed the discussion in the Prospectus under the
caption
<PAGE>
The Board of Directors
April 6, 1994
Page 2
"Certain United States Tax Considerations." To the extent such discussion
covers matters of law or legal conclusions relating to federal income tax
matters, such discussion reflects our opinion as to such matters of law or
legal conclusions. However, to the extent that the discussion addresses the
tax treatment of the stockholders of the Company, it is general in nature and
does not purport to address the specific tax treatment of any particular
stockholder.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our firm in the Registration
Statement.
Very truly yours,
ARENT FOX KINTNER PLOTKIN & KAHN
<PAGE>
================================================================================
WARRANT AGREEMENT
between
CRIIMI MAE Inc.
and
Registrar and Transfer Company
as Warrant Agent
Dated as of April ___, 1994
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Section 1. Appointment of Warrant Agent..................... 1
Section 2. Duties of Warrant Agent.......................... 1
Section 3. Merger, Consolidation or Change
of Name of Warrant Agent......................... 4
Section 4. Change of Warrant Agent.......................... 5
Section 5. Form and Execution of Warrant
Certificates..................................... 5
Section 6. Registration and Countersignature................ 6
Section 7. Registration of Transfers and Exchanges.......... 7
Section 8. Mutilated or Missing Warrant
Certificates..................................... 7
Section 9. Duration and Exercise of Warrants................ 8
Section 10. Issuance of Share Certificates................... 8
Section 11. Adjustment of Exercise Price and
Number of Shares Purchasable per
Number of Warrants............................... 8
Section 12. Fractional Warrants and Fractional Shares........ 12
Section 13. Disposition of Proceeds from Exercise
of Warrants...................................... 13
Section 14. Reservation of Shares............................ 13
Section 15. Payment of Taxes................................. 13
Section 16. Notices to Warrantholders........................ 14
Section 17. Notice to Company and Warrant Agent.............. 15
Section 18. Supplements and Amendments....................... 16
Section 19. Successors....................................... 17
Section 20. Termination...................................... 17
</TABLE>
- i -
<PAGE>
<TABLE>
<S> <C> <C>
Section 21. Governing Law...................... 17
Section 22. Benefits of This Agreement......... 17
Section 23. Counterparts....................... 17
Section 24. Invalidity of Provisions........... 17
</TABLE>
- ii -
<PAGE>
WARRANT AGREEMENT
THIS WARRANT AGREEMENT dated as of April __, 1994 between CRIIMI MAE
Inc., a Maryland corporation (the "Company"), and Registrar and Transfer
Company, a New Jersey corporation, as Warrant Agent (the "Warrant Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company proposes to issue rights ("Warrants") to purchase up
to ___________ shares of the Company's common stock, par value $.01 per share
(the "Shares"), pursuant to that certain Settlement Agreement dated as of
September 24, 1993 by and among (i) Alex J. Meloy, Trustee of the Harry Meloy
Family Trust and Alan J. Hunken, Trustee of the Alan J. Hunken Retirement
Plan, individually and in their capacities as representatives of certain
plaintiff classes in Alex J. Meloy, et al. v. CRI Liquidating REIT, Inc., et
-------------------------------------------------------
al., Civil Action No. 56831 in the Circuit Court for Montgomery County,
---
Maryland and (ii) CRI Liquidating REIT Inc.; CRIIMI MAE Inc., formerly CRI
Insured Mortgage Association, Inc.; C.R.I., Inc.; William B. Dockser; Martin
C. Schwartzberg; and H. William Willoughby;
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, transfer, exchange, replacement and exercise of the Warrants and
other matters as provided herein:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby appoints
----------------------------
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth in this Agreement, and the Warrant Agent hereby accepts
such appointment.
Section 2. Duties of Warrant Agent. The Warrant Agent undertakes the
-----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions:
(a) The Warrant Agent shall not be responsible, or required to
enforce this contract, for any failure of the Company to comply with any of
the covenants contained in this Agreement, the Company's Articles of
Incorporation, as they may be amended from time to time (the "Articles of
Incorporation") or the Warrant Certificates (hereinafter defined).
- 2 -
<PAGE>
(b) The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys, agents or employees.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company), and the Warrant Agent
shall incur no liability or responsibility to the Company or to any of the
holders of the Warrants (the "Warrantholders") in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
opinion or the advice of such counsel; provided, that the Warrant Agent shall
have exercised reasonable care in the selection and continued employment of
such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any Warrantholder for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate or other paper,
document or instrument reasonably believed by it in good faith to be genuine
and to have been signed, sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by it under this Agreement and to
reimburse it upon demand for all expenses, taxes and governmental charges and
other charges of any kind and nature reasonably incurred by it in the
execution of its duties under this Agreement. The Company shall also
indemnify the Warrant Agent and save it harmless against any and all losses,
liabilities and expenses, including judgments, costs and counsel fees, for
anything done or omitted by it arising out of, or in connection with, this
Agreement, except as such is a result of the Warrant Agent's negligence, bad
faith or intentional misconduct.
(f) Subject to (a) and (h) of this Section 2, the Warrant Agent
shall be under no obligation to institute any action, suit or legal proceeding
or to take any other action likely to involve expense unless the Company or
one or more Warrantholders shall furnish the Warrant Agent with reasonable
security and indemnity for any costs and expenses which may be incurred, but
this provision shall not affect the power of the Warrant Agent to take such
action as it may consider proper, whether with or without any such security or
indemnity. Subject to (a) and (h) of this Section 2, all rights of action
under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the certificates evidencing the
Warrants ("Warrant Certificates") or the production thereof at any trial or
other proceeding relative thereto, and any such action, suit or
- 2 -
<PAGE>
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the ratable benefit
of the Warrantholders, as their respective rights or interests may appear.
(g) The Warrant Agent, and any shareholder, director, officer or
employee thereof, may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though the Warrant Agent were
not a party to this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company and not in a ministerial capacity, and its duties shall be determined
solely by the provisions hereof. The Warrant Agent shall not be liable for
anything which it may do or refrain from doing in connection with this
Agreement, except for such as is the result of its own negligence, bad faith
or willful misconduct.
(i) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as reasonably may be
required by the Warrant Agent for the carrying out or performing of the
provisions of this Agreement.
(j) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the perfor-mance of its duties hereunder from the
chairman, president or any vice president of the Company, and to apply to any
such officer for advice or instructions in connection with its duties, and
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer or in good faith
reliance upon any statement signed by any such officer with respect to any
fact or matter (unless other evidence in respect thereof is herein
specifically prescribed) which may be deemed to be conclusively proved and
established by such signed statement.
(k) The Warrant Agent shall not be under any responsibility in
respect of the execution and delivery of this Agreement (except the due
execution and delivery hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant Certificate (except its counter-signature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant
Certificate; nor shall it be responsible for the adjustment of the Purchase
Price, if any,
- 3 -
<PAGE>
(as hereinafter defined) or the making of any change in the number of Shares
required under the provisions of Section 11 or responsible for the manner,
method or amount of any such change or the ascertaining of the existence of
facts that would require any such adjustment or change (except with respect to
the exercise of Warrant Certificates after actual notice of any adjustment of
the Exercise Price); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Shares to be issued pursuant to this Agreement or any Warrant Certi-ficate or
as to whether any Shares will when issued be validly issued.
Section 3. Merger, Consolidation or Change
-------------------------------
of Name of Warrant Agent.
------------------------
(a) Any corporation into which the Warrant Agent may be merged or
with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties
hereto; provided, however, that such corporation shall become the successor to
the Warrant Agent only if it would be eligible for appointment as a successor
Warrant Agent according to the requirements of Section 4 hereof. If at the
time any such successor to the Warrant Agent shall succeed under this
Agreement and any of the Warrant Certificates shall have been countersigned
but not delivered, any such successor to the Warrant Agent may adopt the
countersignature of such predecessor Warrant Agent and deliver such Warrants
so countersigned; and if at that time any of the Warrant Certificates shall
not have been countersigned, any successor to the Warrant Agent may coun-
tersign such Warrant Certificates either in the name of the predecessor
Warrant Agent or in its own name; and in all such cases such Warrant
Certificates shall have the full force provided in the Warrant Certificates
and in this Agreement.
(b) If at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent whose name has changed may adopt the
countersignature under its prior name and deliver the Warrants as
countersigned; if at that time any of the Warrant Certificates shall not have
been countersigned, the Warrant Agent may countersign such Warrant
Certificates in either name; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this
Agreement.
- 4 -
<PAGE>
Section 4. Change of Warrant Agent. The Warrant Agent may resign from
-----------------------
acting as agent for the Company under this Agreement by giving written notice
to the Company and to the Warrantholders of record as of the date of notice to
the Company. The Warrant Agent may be removed by the Company by giving
written notice to the Warrant Agent. Any such notice shall specify the date
upon which such resignation or removal shall be effective (which shall be not
earlier than 30 days after the date of the written notice). If the Warrant
Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after
it has been so notified in writing by the Warrant Agent, then any
Warrantholder may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent, either by the Company or by
such court. Any successor warrant agent, whether appointed by the Company or
such court, shall be a bank or trust company, in good standing, incorporated
under the laws of the United States of America, or any state thereof or the
District of Columbia and having at the time of its appointment as warrant
agent a combined capital and surplus of at least $10,000,000. In the interim,
the duties of the Warrant Agent shall be carried out by the Company. After
appointment, the successor warrant agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed, and the former Warrant Agent shall
deliver and transfer to the successor warrant agent any property at the time
held by it hereunder and execute and deliver any further assurance,
conveyance, act or deed reasonably necessary for such purpose. Failure to
give any notice provided for in this Section 4, however, or any defect herein,
shall not affect the legality or validity of the resignation or removal of the
Warrant Agent or the appointment of a successor warrant agent, as the case may
be.
Section 5. Form and Execution of Warrant Certificates.
------------------------------------------
(a) The Warrant Certificates (and the forms of election to purchase
Shares and of assignment to be printed on the reverse thereof) shall be
substantially of the tenor and purport recited in Exhibit A hereto and may
---------
have such letters, numbers or other marks of identification or designation and
such legends, summaries or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any law
or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Warrant Certificates may be
listed, or to conform with usage.
- 5 -
<PAGE>
(b) Warrant Certificates shall be signed on behalf of the Company
by its president or one of its vice presidents under its corporate seal
reproduced thereon attested by its secretary or an assistant secretary. Such
signatures upon the Warrant Certificates may be in the form of a facsimile
signature of a then present officer notwithstanding the fact that at the time
the Warrant Certificates shall be countersigned and delivered or disposed of
he or she shall have ceased to be an officer.
(c) In case any officer who shall have signed any of the Warrant
Certificates shall cease to be an officer before the Warrant Certificates so
signed shall have been countersigned by the Warrant Agent, or disposed of by
the Company, such Warrant Certificates nevertheless may be countersigned and
delivered or disposed of as though such person had not ceased to be an
officer; and any Warrant Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Warrant
Certificate, is an officer, although at the date of the execution of this
Warrant Agreement any such person was not an officer.
(d) The Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.
Section 6. Registration and Countersignature.
---------------------------------
(a) Warrant Certificates shall be registered in the names of the
record holders to whom they are to be distributed, as provided by the Company;
and the Warrant Agent shall maintain a list showing the name, address and
number of Warrants held by each of the Warrantholders of record.
(b) Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
(c) The Company and the Warrant Agent may deem and treat the
Warrantholder of record as the absolute owner of the Warrant Certificate
(notwithstanding any notation of ownership or other writing thereon made by
anyone) for the purpose of any exercise thereof and any distribution to the
holder thereof and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
Section 7. Registration of Transfers and Exchanges.
---------------------------------------
(a) The Warrant Agent shall from time to time register the transfer
of any outstanding Warrant Certificates upon the records to be maintained by
it for that purpose, upon
- 6 -
<PAGE>
surrender of the Warrant Certificate accompanied (if so required by the
Warrant Agent) by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered holder(s)
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney. Upon any such registration or transfer, a new Warrant
Certificate shall be issued to the transferee, and the surrendered Warrant
Certificate shall be cancelled by the Warrant Agent. Cancelled Warrant
Certificates shall thereafter be returned to the Company or disposed of by the
Warrant Agent in a manner satisfactory to the Company, and in accordance with
the policies and procedures of the Warrant Agent.
(b) Warrant Certificates may be exchanged at the option of the
holders thereof, when surrendered to the Warrant Agent at its office in New
York, New York or Cranford, New Jersey (the "Warrant Agent Office"), for
another Warrant Certificate or other Warrant Certificates of like tenor and
representing in the aggregate a like number of Warrants. Warrant Certificates
surrendered for exchange, transfer or exercise shall be cancelled by the
Warrant Agent.
(c) The Warrant Agent is hereby authorized to countersign, in
accordance with the provisions of Section 6 and this Section 7, and deliver
the new Warrant Certificates required pursuant to the provisions of this
Section 7 and for the purpose of any distribution of Warrant Certificates
contemplated by Section 11 hereof.
Section 8. Mutilated or Missing Warrant Certificates. In case any of
-----------------------------------------
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue, and the Warrant Agent shall countersign
and deliver, in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor
and representing an equivalent number of Warrants, but only upon receipt of
evidence satisfactory to the Company and the Warrant Agent of such loss, theft
or destruction of such Warrant Certificate and an indemnity or bond, if
requested, also satisfactory to the Company and the Warrant Agent. Applicants
for such substitute Warrant Certificates shall also comply with such other
reasonable charges as the Company or the Warrant Agent may prescribe.
Section 9. Duration and Exercise of Warrants.
---------------------------------
(a) The Warrants shall expire at 5:00 p.m. New York City time, on
[547 days from issuance] ___________, 199__ (the "Expiration Date"). Any
Warrant Certificates not surrendered
- 7 -
<PAGE>
to the Warrant Agent for exercise prior to the close of business on the
Expiration Date shall be void.
(b) Subject to the provisions of this Agreement, after the date of
this Agreement and prior to the close of business on the Expiration Date, each
Warrantholder shall have the right to purchase from the Company the number of
Shares specified in the Warrant Certificate being surrendered at the exercise
price (the "Exercise Price"), which shall initially be $13.17 (U.S.) per
Share. In order to exercise such right, the Warrantholder shall surrender the
Warrant Certificate(s) evidencing such Warrants to the Warrant Agent at the
Warrant Agent Office with the form of election to purchase on the reverse side
thereof duly completed and signed, and shall tender payment in full to the
Warrant Agent for the Company's account of the Exercise Price, together with
such taxes as are specified in Section 15 hereof, for each Share with respect
to which such Warrants are being exercised. Such Exercise Price and taxes
shall be paid in full by check payable to the order of the Warrant Agent.
(c) The Warrants evidenced by the Warrant Certificates shall be
exercisable only in multiples of one (1) Warrant. In the event that less than
all of the Warrants evidenced by a Warrant Certificate are exercised at any
time prior to the close of business on the Expiration Date, a new Warrant
Certificate(s) shall be issued to the Warrantholder, or his duly authorized
assigns, by the Warrant Agent for the remaining number of Warrants evidenced
by the Warrant Certif-icate so surrendered.
Section 10. Issuance of Share Certificates. Upon surrender of a Warrant
------------------------------
Certificate and payment of the Exercise Price, the Company shall issue and
cause to be delivered with reasonable dispatch to or upon the written order of
the Warrantholder and in such name or names as the Warrantholder may
designate, a certificate or certificates for the number of full Shares so
purchased upon the exercise of such Warrants. Such certificate or
certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of record of such
Shares as of the date of countersignature by the Warrant Agent.
Section 11. Adjustment of Exercise Price and Number of Shares
-------------------------------------------------
Purchasable per Number of Warrants. The Exercise Price and the number of
----------------------------------
Shares purchasable upon the exercise of each Warrant are subject to adjustment
from time to time upon the occurrence of the events specified in this Section
11.
(a) In case the Company shall at any time after the date of this
Agreement (i) declare a distribution on Shares payable in Shares, (ii)
subdivide the outstanding Shares,
- 8 -
<PAGE>
(iii) combine the outstanding Shares into a smaller number of Shares or (iv)
issue any shares ("New Shares") in a reclassification of the Shares (including
any such reclassification in connection with a consolidation or merger in
which the Company is the continuing legal entity), the Exercise Price in
effect at the record date for such distribution or at the effective date of
such subdivision, combination or reclassification, and/or the number or kind
of Shares issuable on such date, shall be proportionately adjusted so that the
holder of any Warrant exercised after such time shall be entitled to receive
the aggregate number and kind of Shares or New Shares which, if such Warrant
had been exercised immediately prior to such date, he would have owned upon
such exercise and have been entitled to receive by virtue of such
distribution, subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) In case the Company shall issue to all holders of Shares rights
or warrants to subscribe for or purchase additional Shares at a price per
Share less than the Current Market Price (as defined in Section 11(d)) in
effect immedi-ately prior to the time of such issuance, then in each such case
the Exercise Price shall forthwith be adjusted to equal the quotient obtained
by multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be (i) an amount equal to the sum of
(A) the number of Shares outstanding immediately prior to such issuance plus
(B) the number of Shares which the aggregate consideration to be received upon
exercise of such rights or warrants would purchase at such Current Market
Price per Share, and the denominator of which shall be (ii) the total number
of Shares outstanding immediately after such exercise.
In case of the issuance by the Company of any such rights or
warrants to purchase Shares (i) the Company shall be deemed to have issued the
maximum number of Shares deliverable upon the exercise of such rights or
warrants and (ii) the consideration therefor shall be deemed to be the
consideration received by the Company for such rights or warrants, without
deduction of the costs, expenses, fees and commissions inci-dental to the
issue and sale thereof plus the minimum price at which Shares are to be
delivered upon the exercise of such rights or warrants. No further adjustment
of the Exercise Price shall be made as a result of the actual issuance of the
Shares referred to in this paragraph. On the expiration of such rights or
warrants, the Exercise Price and the number of Shares purchasable upon
exercise of the Warrants shall be readjusted to such Exercise Price and such
number of Shares as would have pertained had the adjustments made upon the
issuance of such rights or warrants been made upon the basis
- 9 -
<PAGE>
of the issuance of only the number of Shares actually delivered upon the
exercise of such rights or warrants.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Shares of evidences of indebtedness or assets
(other than cash distributions payable in the ordinary course of business or
distributions payable in Shares) or subscription rights or warrants (excluding
those referred to in Section 11(b)), the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, of which the
numerator shall be the Current Market Price per Share (as defined in Section
11(d)) on such record date, less the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive, and described in
a statement filed with the Warrant Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to one Share and of which the denominator shall be such
Current Market Price per Share. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution
is not so made, the Exercise Price shall again be adjusted to be the Exercise
Price which would then be in effect if such record date had not been fixed.
(d) For the purpose of any computation under this Agreement except
as provided in Section 12, the Current Market Price per Share on any date
shall be deemed to be the average of the daily closing prices for the five
consecutive trading days immediately before such date. The closing price for
each day shall be the last sale price regular way or, in case no such sale
takes place on such day, the average of the closing bid and asked prices
regular way on the principal national securities exchange on which the Shares
are listed or admitted to trading, or if the Shares are not listed or admitted
to trading on any national securities exchange, the average of the highest
reported bid and lowest reported asked price as quoted on the National
Association of Securities Dealers, Inc. Automated Quotation System, or any
similar system of dissemination of quotations of securities prices in common
use.
(e) No adjustment in the Exercise Price shall be required (i) in
connection with the grant of options to directors, officers or employees of
the Company or the exercise thereof or (ii) unless such adjustment would
require an increase or decrease of at least $.25 in the Exercise Price;
provided, however, that any adjustments which by reason of clause (ii) of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Section 11
- 10 -
<PAGE>
shall be made to the nearest cent or one-hundredth of a Share, as the case may
be, provided, however, that no fractional Shares will be issued.
(f) In the event that at any time, as a result of an adjustment
made pursuant to Section 11(a), the holder of any Warrant thereafter exercised
shall become entitled to receive any New Shares, thereafter the number of such
New Shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Shares contained in Sections
11(a), (b) and (c), and the provisions of Sections 10, 11(e), (f) and (j), 12,
14, 15 and 16 with respect to the Shares shall apply on like terms to any such
New Shares.
(g) In any case in which this Section 11 shall require that any
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Warrant exercised on or after such
record date the Shares or New Shares, if any, issuable upon such exercise on
the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such Shares
or New Shares upon the occurrence of the event requiring such adjustment.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Exercise Price as a
result of the calculations made in Section 11(a), (b) or (c), each Warrant
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Exercise Price,
that number of Shares obtained by (A) multiplying (i) the number of Shares
purchasable upon exercise of a Warrant immediately prior to such adjustment of
the Exercise Price by (ii) the Exercise Price in effect immediately prior to
such adjustment of the Exercise Price and (B) dividing the product so obtained
by the Exercise Price in effect immediately after such adjustment of the
Exercise Price.
(i) The Company may elect, on or after the date of any adjustment
of the Exercise Price, to adjust the number of Warrants in substitution for an
adjustment in the number of Shares purchasable upon the exercise of a Warrant
as provided in Section 11(h).
(j) In case of any reorganization of the Company, or in case of the
consolidation or merger of the Company with
- 11 -
<PAGE>
any other legal entity (other than a consolidation or merger in which the
Company is the continuing legal entity) or of the sale of the properties and
assets of the Company as, or substantially as, an entirety to any other legal
entity, each Warrant shall after such reorganization, consolidation, merger or
sale be exercisable, upon the terms and conditions speci-fied in this
Agreement, for the number of shares in corresponding shares or other
securities or property to which a holder of the number of Shares purchasable
(at the time of such reorganization, consolidation, merger or sale) upon
exercise of such Warrant would have been entitled upon such reorganization,
consolidation, merger or sale; and in any such case, if necessary, the
provisions set forth in this Section 11 with respect to the rights and
interests thereafter of the holders of the Warrants shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be, to any such
share or other securities or property thereafter deliverable on the exercise
of the Warrants. The Company shall not effect any such consolidation, merger
or sale, unless prior to or simultaneously with the consummation thereof the
successor (if other than the Company) resulting from such consolidation or
merger or the legal entity purchasing such assets shall assume, by written
instrument executed and delivered to the Warrant Agent, the obligation to
deliver to the holder of each Warrant such shares, securities or assets as, in
accordance with the foregoing provisions, such holders may be entitled to
purchase and the other obligations under this Agreement.
Section 12. Fractional Warrants and Fractional Shares.
-----------------------------------------
(a) The Company shall not issue fractions of Warrants on any
distribution of Warrants to Warrantholders or distribute Warrant Certificates
which evidence fractional Warrants. All fractions of Warrants to which a
Warrantholder would otherwise be entitled shall be aggregated, and in lieu of
such remaining fractional Warrant there shall be paid to the Warrantholder
with regard to which such fractional Warrant would otherwise be issuable, an
amount in cash equal to the same fraction of the fair value of a full Warrant,
as determined in good faith by the Board of Directors.
(b) The Company shall not be required to issue fractions of Shares
upon exercise of the Warrants or to distribute certificates which evidence
fractional Shares. All fractions of Shares to which a Warrantholder would
otherwise be entitled shall be aggregated, and in lieu of such remaining
fractional Share, there shall be paid to the Warrantholder at the time such
Warrant Certificates are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of a Share. For such
purpose, the current market value of a Share shall be the closing price of a
Share (as determined pursuant to Section 11(d)) for the last
- 12 -
<PAGE>
trading day immediately prior to the day on which a Warrant is exercised.
(c) If at any time during the term hereof, it becomes necessary for
the Warrant Agent to pay Warrantholders or former Warrantholders for
fractional Warrants or fractional Shares, the Warrant Agent shall inform the
Company and the Company shall promptly deposit sufficient funds with the
Warrant Agent who shall distribute such funds upon receipt. The Warrant Agent
shall have no duty to distribute amounts in payment of fractional Warrants or
fractional Shares until receipt of sufficient funds from the Company.
Section 13. Disposition of Proceeds from Exercise of Warrants. The
-------------------------------------------------
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all moneys received by the
Warrant Agent on the purchase of Shares through the exercise of Warrants.
Section 14. Reservation of Shares. The Company shall at all times
---------------------
reserve and keep available for the purpose of enabling it to satisfy any
obligation to issue Shares upon exercise or conversion of Warrants, through
the close of business on the Expiration Date, the number of Shares deliverable
upon the exercise of all outstanding Warrants, and the Transfer Agent for such
Shares is hereby irrevocably authorized and directed at all times to reserve
such number of authorized and unissued Shares as shall be required for such
purpose. The Company shall keep a copy of this Agreement on file with such
Transfer Agent.
The Company represents and warrants that all Shares issued upon exercise
of the Warrants will, upon issuance in accordance with the terms of this
Agreement, be legally issued and free from all taxes, liens, charges,
encumbrances and security interests created by the Company with respect to the
issuance thereof.
Section 15. Payment of Taxes. The Company will pay all documentary
----------------
stamp taxes attributable to the initial issuance of Shares upon the exercise
of Warrants prior to the close of business on the Expiration Date; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issuance of any
Warrant Certificates or any Share Certificates in a name other than that of
the Warrantholder of record surrendered upon the exercise or conversion of a
Warrant, and the Company shall not be required to issue or deliver such Share
Certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
- 13 -
<PAGE>
Section 16. Notices to Warrantholders. Upon any adjustment to the
-------------------------
Exercise Price pursuant to Section 11, the Company within 20 calendar days
thereafter shall (i) cause to be filed with the Warrant Agent a certificate of
a firm of independent public accountants of recognized standing selected by
the Company (who may be the regular auditors of the Company) setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail
the method of calculation and the facts upon which such calculations are based
and setting forth the number of Shares purchasable upon exercise of a Warrant
after such adjustment in the Exercise Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein and
(ii) cause to be given to each of the Warrantholders, at his address appearing
on the warrant register, written notice of such adjustments by first-class
mail, postage prepaid. Where appropriate such notice may be given in advance
and included as a part of the notice required to be mailed under the other
provisions of this Section 16.
In case:
(a) the Company shall authorize the issuance to all holders of
Shares of rights or warrants to subscribe for or purchase additional Shares or
of any other subscription rights or warrants;
(b) the Company shall authorize the distribution to all holders of
Shares of evidences of its indebtedness or assets (other than cash
distributions payable in the ordinary course of business or distributions
payable in Shares);
(c) the Company shall be a party to any consolidation or merger for
which approval of any stockholder of the Company is required, shall convey or
transfer all or substantially all of its properties and assets, or shall
engage in any reorganization;
(d) the Company shall be subject to voluntary or involuntary
dissolution, liquidation or winding up; or
(e) the Company shall propose to take any other action which would
require an adjustment of the Exercise Price pursuant to Section 11;
the Company shall cause to be filed with the Warrant Agent and shall cause to
be given to each Warrantholder of record at his address appearing on the
Warrant register, at least 20 calendar days (or 10 calendar days in any case
specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, by first-class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of
- 14 -
<PAGE>
record of Shares to be entitled to receive any such rights, warrants or
distribution are to be determined or (ii) the date on which any such
consolidation, merger, conveyance, transfer, reorganization, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of record of the Shares shall be entitled to
exchange such Shares for securities or other property which may be deliverable
upon such consolidation, merger, conveyance, transfer, reorganization,
dissolution, liquidation or winding up. The failure to give the notice
required by this Section 16 or any defect therein shall not affect the
legality or validity of any distribution, right, warrant, consolidation,
merger, conveyance, transfer, reorganization, dissolution, liquidation or
winding up or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant Certificates
shall entitle the Warrantholder to any of the rights of a stockholder of the
Company, including, without limitation, the right to vote, to receive
distributions, or to attend or receive any notice of meetings of stockholders
or any other proceedings of the Company.
Section 17. Notice to Company and Warrant Agent. Any notice or demand
-----------------------------------
authorized by this Agreement to be given or made by the Warrant Agent or any
Warrantholders to or on the Company shall be sufficiently given or made if
personally delivered or sent by first-class mail, postage-prepaid or by
telegram or telex confirmed by letter addressed (until another address is
filed in writing by the Company with the Warrant Agent), as follows:
CRIIMI MAE Inc.
CRI Building
11200 Rockville Pike
Rockville, Maryland 20852
Attention: Office of General Counsel
In case the Company shall fail to maintain such office or agency or shall
fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at
the Warrant Agent Office.
Any notice pursuant to this Agreement to be given by the Company or by
Warrantholders to the Warrant Agent shall be sufficiently given if personally
delivered or sent by mail or telegram or telex confirmed by letter, addressed
(until another address is filed in writing by the Warrant Agent with the
Company) to the Warrant Agent as follows:
For personal, telegram or telex delivery:
- 15 -
<PAGE>
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Attention: William Tatler,
Vice President - Transfers
For delivery or confirmation by mail:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Attention: William Tatler,
Vice President - Transfers
Section 18. Supplements and Amendments. The Company and the Warrant
--------------------------
Agent may from time to time supplement or amend this Agreement without the
consent or concurrence of any Warrantholder in order to cure any ambiguity,
manifest error or other mistake in this Agreement, or to make provision in
regard to any matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not adversely
affect, alter or change the interests of the Warrantholders. The Company and
the Warrant Agent may from time to time otherwise supplement or amend this
Agreement without notice to any Warrantholder but with the consent of
Warrantholders holding at least a majority in number of Warrants then
outstanding; however, without the consent of each Warrantholder affected
thereby, an amendment or supplement may not
(a) make any modification of the terms upon which the Warrants are
exercisable; or
(b) change the percentage of Warrantholders who must consent to an
amendment or supplement.
Section 19. Successors. All the covenants and pro-visions of this
----------
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 20. Termination. This Agreement shall terminate at the close of
-----------
business 60 days after the Expiration Date. Notwithstanding the foregoing,
this Agreement will terminate on any earlier date if all Warrants have been
exercised.
Section 21. Governing Law. This Agreement and each Warrant Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Maryland and for all purposes shall be construed in accordance with
the laws of said State (without regard to the principles of conflicts of laws
thereof).
- 16 -
<PAGE>
Section 22. Benefits of This Agreement. Nothing in this Agreement shall
--------------------------
be construed to give to any person or entity other than the Company, the
Warrant Agent and the Warrantholders any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company, the Warrant Agent and the Warrantholders.
Section 23. Counterparts. This Agreement may be executed in any number
------------
of counterparts and each of such coun-terparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 24. Invalidity of Provisions. If any provision of this
------------------------
Agreement or of the Warrant Certificates is or becomes invalid, illegal or
unenforceable in any respect, such provision shall be amended to the extent
necessary to cause it to express the intent of the parties and be valid, legal
and enforceable. The amendment of such provision shall not affect the
validity, legality or enforceability of any other provision hereof.
- 17 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
CRIIMI MAE Inc.
By:
--------------------------------
Its:
--------------------------
REGISTRAR AND TRANSFER COMPANY,
Warrant Agent
By:
--------------------------------
Its:
---------------------------
- 18 -
<PAGE>
EXHIBIT A
FORM OF WARRANT CERTIFICATE
No.____________________________ CUSIP No._________________________
Certificate for ______ Warrants
EXERCISABLE COMMENCING ON THE DATE OF ISSUANCE
HEREOF AND ENDING
5:00 P.M., NEW YORK CITY TIME, ON ____________, 199__
CRIIMI MAE Inc.
WARRANT CERTIFICATE
THIS CERTIFIES that ______________ or registered assigns is the
registered holder (the "Registered Holder") of the number of Warrants set
forth above, each of which represents the right to purchase one share of the
Common Stock, par value $.01 per share (a "Share"), of CRIIMI MAE Inc., a
Maryland corporation (the "Company"), at the initial exercise price (the
"Exercise Price") of $13.17, at any time during the Warrant Exercise Period
hereinafter referred to, by surrendering this Warrant Certificate, with the
form of election to purchase set forth hereon duly executed with signatures
guaranteed by a member firm of a national securities exchange, a commercial
bank or a trust company located in the United States of America, or a member
of the National Association of Securities Dealers, Inc., at the office
maintained for that purpose by Registrar and Transfer Company or its successor
as warrant agent, in New York City, New York or Cranford, New Jersey (any such
warrant agent being herein called the "Warrant Agent"), and by paying in full
the Exercise Price, plus transfer taxes, if any, in United States currency by
check payable to the order of the Warrant Agent.
The Warrant Exercise Period shall commence on the date of issuance
hereof and shall expire at 5:00 P.M., New York City time, on ____________,
199__ (the "Expiration Date"). No Warrant may be exercised after the
Expiration Date.
Prior to the Expiration Date, subject to any applic-able laws, rules
or regulations restricting transferability, the Registered Holder shall be
entitled to transfer this Warrant Certificate, in whole or in part, upon
surrender of this Warrant Certificate at the office of the Warrant Agent
maintained for that purpose in New York City, New York or Cranford, New Jersey
with the form of assignment set forth hereon duly executed with signatures
guaranteed by a member firm of a national securities exchange, a commercial
bank or a
<PAGE>
trust company located in the United States of America, or a member of the
National Association of Securities Dealers, Inc. Upon any such transfer, a
new Warrant Certificate or Warrant Certificates representing the same
aggregate number of Warrants will be issued in accordance with instructions in
the form of assignment.
Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, there shall be issued to the Registered Holder a new
Warrant Certificate in respect of the Warrants not exercised.
Prior to the Expiration Date, the Registered Holder shall be
entitled to exchange this Warrant Certificate, with or without other Warrant
Certificates, for another Warrant Certificate or Warrant Certificates for the
same aggregate number of Warrants, upon surrender of this Warrant Certificate
at the office maintained for that purpose by the Warrant Agent in New York
City, New York.
Upon certain events provided for in the Warrant Agreement, the
Exercise Price and the number of Shares issuable upon the exercise of each
Warrant are required to be adjusted.
No fractional Shares will be issued upon the exercise of Warrants.
As to any final fraction of a Share which the Registered Holder of one or more
Warrant Certificates, the rights under which are exercised in the same
transaction, would otherwise be entitled to purchase upon such exercise, the
Company shall pay the cash value thereof determined as provided in the Warrant
Agreement.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of April ___, 1994 between the Company and the
Warrant Agent (the "Warrant Agreement") and is subject to the terms and
provisions contained in the Warrant Agreement, to all of which terms and
provisions the Registered Holder consents by acceptance hereof. A copy of the
Warrant Agreement may be obtained for inspection by the Registered Holder upon
written request to the Warrant Agent.
This Warrant Certificate shall not entitle the Registered Holder to
any of the rights of a stockholder of the Company, including, without
limitation, the right to vote, to receive distributions, or to attend or
receive any notice of meetings of stockholders or any other proceedings of the
Company.
- 2 -
<PAGE>
This Warrant Certificate shall not be valid for any purpose until it
shall have been countersigned by the Warrant Agent.
The validity, interpretation and performance of this Warrant
Certificate shall be governed by the laws of the State of Maryland (without
regard to the principles of conflicts of laws thereof).
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed.
[Corporate Seal] CRIIMI MAE Inc.
Attest By:
--------------------------------
Its:
By: -----------------------------
------------------------
Its:
--------------------
Countersigned REGISTRAR AND TRANSFER COMPANY
as Warrant Agent
Dated: By:
-------------------------------------
Authorized Signature
- 3 -
<PAGE>
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise ________ of
the Warrants represented by this Warrant Certificate and to purchase the
___________ Shares issuable upon the exercise of said Warrants, and requests
that Share Certificates for such Shares be issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------------
(Name)
-----------------------------------------------------------
(Address, Including Zip Code)
-----------------------------------------------------------
(Social Security or Tax Identification Number)
DELIVER TO:
-----------------------------------------------------------
(Name)
at
--------------------------------------------------------
(Address, Including Zip Code)
If the number of Warrants hereby exercised is less than all the
Warrants represented by this Warrant Certificate, the undersigned requests
that a new Warrant Certificate representing the number of full Warrants not
exercised be issued and delivered as set forth above or otherwise as the
undersigned shall direct in writing.
In full payment of the purchase price with respect to the Warrants
exercised and transfer taxes, if any, the undersigned hereby tenders payment
of $_________ by check payable in United States currency to the order of the
Warrant Agent.
Dated: ___________, 19__
--------------------------------------------
Signature
(Signature must conform in all respects to name of holder
as specified on the face of the Warrant Certificate.)
PLEASE INSERT SOCIAL SECURITY OR TAX
Signature Guaranteed: IDENTIFICATION NUMBER OF HOLDER
-------------------------- --------------------------------------------
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
represented by the within Warrant Certificate, with respect to the number of
Warrants set forth below:
<TABLE>
<CAPTION>
Social
Name of Security No.
Assignee or Tax I.D. Address No. of Warrants
-------- ------------ ------- ---------------
<S> <C> <C> <C>
</TABLE>
and does hereby irrevocably constitute and appoint ________________, Attorney,
to make such transfer on the books of CRIIMI MAE Inc. maintained for that
purpose, with full power of substitution in the premises.
Dated: , 19
----------- -- -------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
Signature Guaranteed:
------------------------------
- 2 -
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 11, 1994,
included in the Annual Report of CRIIMI MAE Inc. on Form 10-K for the year
ended December 31, 1993, as amended, and to all references to our Firm included
in or made a part of this registration statement.
Arthur Andersen & Co.
Washington, D.C.
April 7, 1994
