<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
---------
CRIIMI MAE Inc.
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
226603 10 8
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(CUSIP Number)
H. William Willoughby Robert B. Hirsch, Esq.
11200 Rockville Pike ARENT FOX KINTNER PLOTKIN & KAHN
Rockville, Maryland 20852 1050 Connecticut Avenue, N.W.
301/231-0382 Washington, D.C. 20036 (202/875-6235)
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
May 1, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Check the following box if a fee is being paid with this statement /X/. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. SEE RULE 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following page)
Page 1 of 2 Pages
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SCHEDULE 13D
CUSIP No. 226603 10 8 Page 2 of 2 Pages
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(1) Names of Reporting Persons. S.S. or I.R.S. Identification Nos. of Above
Persons
H. William Willoughby
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(2) Check the Appropriate Box if a Member (a) / /
of a Group* (b) / /
Not applicable
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(3) SEC Use Only
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(4) Source of Funds*
00
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
Not applicable
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(6) Citizenship or Place of Organization
United States
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Number of Shares (7) Sole Voting Power
Beneficially Owned 1,670,633
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting Power
2,767
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(9) Sole Dispositive Power
1,670,633
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(10) Shared Dispositive Power
2,767
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,715,100 (including 41,700 shares owned by Mr. Willoughby's spouse)
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares*
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(13) Percent of Class Represented by Amount in Row (11)
5.64%
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(14) Type of Reporting Person*
IN
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*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDE OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Statement relates to the common stock, par value $0.01 per share
("Common Shares"), of CRIIMI MAE Inc., a Maryland corporation (the "Issuer").
The principal executive offices of the Issuer are located at 11200 Rockville
Pike, Rockville, Maryland 20852.
ITEM 2. IDENTITY AND BACKGROUND.
(a) and (b) This Statement is filed by H. William Willoughby, a natural
person whose business address is 11200 Rockville Pike, Rockville, Maryland
20852.
(c) Mr. Willoughby is President, Secretary, a director and an employee
of CRIIMI MAE Management, Inc., a Maryland corporation and a wholly owned
subsidiary of the Issuer ("CRIIMI Management"), as well as President,
Secretary and a director of the Issuer. Mr. Willoughby is also President,
Secretary, a director and 50% owner of CRI, Inc., a Delaware corporation
("CRI"), which engages in real estate and related activities.
(d) and (e) Mr. Willoughby has not been the subject of any criminal
proceeding (excluding traffic violations or similar misdemeanors) during the
past five years, nor has Mr. Willoughby been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction within the past
five years as a result of which he was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) Mr. Willoughby is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Mr. Willoughby is a party to an Agreement and Plan of Merger, dated as
of April 20, 1995, as amended as of June 20, 1995 (the "Merger Agreement"),
pursuant to which, on June 30, 1995 (the "Closing Date"), CRICO Mortgage
Company, Inc., a Delaware corporation, CRI/AIM Management, Inc., a Delaware
corporation and CRI Acquisition, Inc., a Maryland corporation, each owned 50%
by Mr. Willoughby, were merged with and into CRIIMI Management (the
"Merger"). As part of the consideration paid in the Merger, on the Closing
Date Mr. Willoughby was issued 1,325,419 Common Shares (the "Merger Shares")
and options to purchase (i) 1,000,000 Common Shares at a per share price of
$9.77 and (ii) 500,000 Common Shares at a per share price of $12.27. The
options vest in equal installments on the first five anniversaries of the
Closing Date. The Merger Agreement, designated Exhibit 1 to this Statement,
is incorporated herein by reference.
<PAGE>
Mr. Willoughby owns an additional 89,681 Common Shares, including (i)
32,000 Common Shares which he acquired with his own funds through purchases
on the open market between June, 1991 and November, 1994 for an aggregate
purchase price of approximately $276,725; (ii) 13,214 Common Shares issued to
him in 1989 pursuant to a merger between the Issuer and each of CRI Insured
Mortgage Investments Limited Partnership, CRI Insured Mortgage Investments
II, Inc. and CRI Insured Mortgage Investments III Limited Partnership (the
"1989 Merger"); (iii) 2,767 Common Shares owned by CRI and acquired by it in
the 1989 Merger; and (iv) 41,700 Common Shares owned by Mr. Willoughby's
spouse, 28,090 of which she acquired with her own funds through purchases on
the open market between November, 1991 and March, 1994 for an aggregate
purchase price of approximately $309,701, and 13,610 of which were issued to
her in the 1989 Merger.
ITEM 4. PURPOSE OF TRANSACTION.
Mr. Willoughby acquired the Merger Shares for investment purposes,
pursuant to the Merger, as a result of which the Issuer became a fully
integrated, self-administered and self-managed mortgage investment, advisory,
servicing and origination real estate investment trust.
Pursuant to the Merger Agreement, on June 30, 1995 Mr. Willoughby and
certain other persons entered into a Registration Rights and Lock-Up
Agreement whereby (i) the Issuer granted to such parties certain demand,
piggy-back and shelf registration rights with respect to certain Common
Shares, including the Merger Shares in the case of Mr. Willoughby, and (ii)
such parties agreed, except in limited circumstances, not to transfer certain
Common Shares, including the Merger Shares in the case of Mr. Willoughby, for
a period ending on the earlier of (a) June 30, 1998 or (b) the date the
employment of any such party terminates, unless such termination is for cause
(as defined) or is the result of voluntary resignation. A copy of the
Registration Rights and Lock-Up Agreement is attached hereto as Exhibit 2 and
incorporated herein by this reference.
Pursuant to the Merger Agreement, Mr. Willoughby agreed not to acquire
ownership of any additional Common Shares to the extent that after such
acquisition he would have ownership in the aggregate of more than 9.8% of the
outstanding Common Shares. Mr. Willoughby further agreed that any such
additional Common Shares would be deemed "Excess Shares" as defined in
Article Eighteenth of the Issuer's Articles of Incorporation and would be
subject to the treatment prescribed therein for Excess Shares. A copy of
this agreement (the "Stock Restriction Agreement") is attached hereto as
Exhibit 3 and incorporated herein by this reference.
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<PAGE>
Subject to the foregoing, Mr. Willoughby reserves the right to purchase
additional securities of the Issuer or to sell some or all of the Common
Shares owned by him at any time in private or market transactions depending
on market conditions, his evaluation of the Issuer's business, prospects and
financial condition, the market for the Common Shares, other opportunities
available to Mr. Willoughby, prospects for Mr. Willoughby's own businesses,
general economic conditions, money and stock market conditions and other
further developments.
Except as described herein and in Item 6 and except for plans and
proposals of the Issuer in which Mr. Willoughby may participate in his
capacity as an officer and director of the Issuer, Mr. Willoughby has no
plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or
of any of its subsidiaries;
(d) Any change in the present Board of Directors (the "Board") or
management of the Issuer, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies on the Board;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure;
(g) Changes in the Issuer's charter or bylaws or other actions which
may impede the acquisition of control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(j) Any action similar to any of those enumerated above.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Mr. Willoughby beneficially owns 1,715,100 Common Shares (including
options, exercisable as of June 30, 1996, to purchase (i) 200,000 Common
Shares at a per share price of $9.77 and (ii) 100,000 Common Shares at a per
share price of $12.27) representing approximately 5.64% of the outstanding
Common Shares as of April 8, 1996.
(b)(i) Mr. Willoughby has the sole power to vote and dispose of
1,670,633 Common Shares.
(ii) Mr. Willoughby shares the power to vote and dispose of the 2,767
Common Shares owned by CRI with William B. Dockser, the other 50% stockholder
of CRI. Information required by Item 2 with respect to Mr. Dockser is set
forth in the Statement on Schedule 13D filed by Mr. Dockser on July 10, 1995.
Mr. Willoughby makes no representation as to the accuracy of such
information.
(iii) The power to vote and dispose of the 41,700 Common Shares owned
by Mr. Willoughby's spouse is held solely by Mr. Willoughby's spouse.
(c) No transactions in Common Shares by Mr. Willoughby were effected
during the sixty days prior to the date of this Schedule.
(d) As the other 50% stockholder of CRI, Mr. Dockser shares with Mr.
Willoughby the right to receive dividends from, and the proceeds from the
sale of, the 2,767 Common Shares owned by CRI. In addition, Mr. Willoughby's
spouse has the sole right to receive dividends from, and the proceeds from
the sale of, the 41,700 Common Shares owned by her. No other person has the
right to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, Common Shares owned by Mr. Willoughby.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS AND RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The information contained in Item 3 of this Statement with respect to
the Merger Agreement and in Item 4 of this Statement with respect to the
Registration Rights and Lock-Up Agreement and the Stock Restriction Agreement
is incorporated herein by this reference.
Pursuant to the Merger Agreement, Mr. Willoughby and the Issuer entered
into an Option Agreement dated June 30, 1995
- 4 -
<PAGE>
pursuant to which the Issuer granted to Mr. Willoughby options to purchase
(i) up to 1,000,000 Common Shares for a per share purchase price of $9.77
(i.e., $1.50 per share more than the aggregate average of the high and low
sales prices of a Common Share during the ten trading days immediately
preceding June 30, 1995 (the "Trading Price")) and (ii) up to 500,000 Common
Shares for a per share purchase price of $12.27 (i.e., $4.00 per share more
than the Trading Price). Such options vest annually in 20% increments
commencing June 30, 1996 and expire on the close of business on June 29,
2003. Thus, as of June 30, 1996, options to purchase 200,000 Common Shares
at a per share price of $9.77 and 100,000 Common Shares at a per share price
of $12.27 become exercisable. A copy of the Option Agreement is attached
hereto as Exhibit 4 and incorporated herein by this reference.
Except as described herein or in Items 3 and 4, Mr. Willoughby does not
have any contract, arrangement, understanding or relationship (legal or
otherwise) with any person with respect to any securities of the Issuer,
including but not limited to the transfer of any of the Common Shares owned
by him, finder's fees, joint ventures, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1(a) -- Merger Agreement.(1)
Exhibit 1(b) -- First Amendment to Agreement and Plan of Merger dated as of
June 20, 1995.
Exhibit 2 -- Registration Rights and Lock-Up Agreement.
Exhibit 3 -- Stock Restriction Agreement.
Exhibit 4 -- Option Agreement.
________________________
(1) Pursuant to Rule 12b-32(a) under the Securities Exchange Act of 1934, as
amended, the Merger Agreement dated as of April 20, 1995 is incorporated
herein by reference to Appendix A of the Issuer's definitive proxy statement
(file no. 1-10360) filed with the Securities and Exchange Commission on April
26, 1995.
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<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete
and correct.
Date: May 13, 1996 // H. William Willoughby //
---------------------------
H. William Willoughby
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<PAGE>
EXHIBIT LIST
Exhibit 1(a) -- Merger Agreement.(1)
Exhibit 1(b) -- First Amendment to Agreement and Plan of Merger dated as of
June 20, 1995.
Exhibit 2 -- Registration Rights and Lock-Up Agreement.
Exhibit 3 -- Stock Restriction Agreement.
Exhibit 4 -- Option Agreement.
________________________
(1) Pursuant to Rule 12b-32(a) under the Securities Exchange Act of 1934, as
amended, the Merger Agreement dated as of April 20, 1995 is incorporated
herein by reference to Appendix A of the Issuer's definitive proxy statement
(file no. 1-10360) filed with the Securities and Exchange Commission on April
26, 1995.
- 7 -
<PAGE>
EXHIBIT 1(b)
<PAGE>
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "Amendment"),
dated as of June 20, 1995, among CRIIMI MAE, Inc., a Maryland corporation
("CRIIMI MAE"), CRIIMI Management, Inc., a newly formed Maryland corporation
and a wholly-owned subsidiary of CRIIMI MAE ("CRIIMI Management"), CRICO
Mortgage Company, Inc., a Delaware corporation ("CRICO Mortgage"), CRI/AIM
Management, Inc., a Delaware corporation ("CRI/AIM Management"), CRI
Acquisition, Inc., a Maryland corporation ("CRI Acquisition"), William B.
Dockser and H. William Willoughby (collectively, the "Parties"). All
capitalized terms not otherwise defined herein shall have the meaning
ascribed to such terms in the Agreement and Plan of Merger dated as of April
20, 1995 (the "Merger Agreement").
WHEREAS, the Parties entered into the Merger Agreement as of April 20,
1995.
WHEREAS, the Parties desire to amend the definition of Effective Time in
the Merger Agreement;
WHEREAS, the Special Committee has recommended this Amendment to the
Board of Directors of CRIIMI MAE (the "Board") and the Board (with the
Principals abstaining) has approved this Amendment; and
WHEREAS, the respective Boards of Directors and of each of the CRI
Mortgage Businesses have unanimously approved this Amendment.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:
1. AMENDMENT. The second sentence of Section 1.2 of the Merger
Agreement is hereby deleted and replaced by the following:
The Merger shall become effective at 11:59 p.m. on the later
of the date of filing of the Articles of Merger with the
Department and the Certificate of Merger with the Secretary
of State of the State of Delaware (the "Effective Time").
2. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts is signed by each of the
parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
3. NO FURTHER CHANGES. Except as amended hereby, the terms of the
Merger Agreement remain unchanged.
<PAGE>
IN WITNESS WHEREOF, the Parties have signed this Amendment or caused
this Amendment to be signed by their respective officers thereunto duly
authorized, as applicable, all as of the date first above written.
CRIIMI MAE INC.
By: /s/
-----------------------------------
Name:
Title:
CRIIMI MAE MANAGEMENT, INC.
By: /s/
-----------------------------------
Name:
Title:
CRICO MORTGAGE COMPANY, INC.
By: /s/
-----------------------------------
Name:
Title:
CRI/AIM MANAGEMENT, INC.
By: /s/
-----------------------------------
Name:
Title:
(Signatures continued on the following page)
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<PAGE>
CRI ACQUISITION, INC.
By: /s/
-----------------------------------
Name:
Title:
THE PRINCIPALS:
/s/
-----------------------------------
William B. Dockser
/s/
-----------------------------------
H. William Willoughby
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EXHIBIT 2
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REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Agreement". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Common Shares". . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Company". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Demand Holders" . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Demand Notice". . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Demand Registration". . . . . . . . . . . . . . . . . . . . . . . . 1
"Demand Request" . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Employment Agreements". . . . . . . . . . . . . . . . . . . . . . . 1
"Holders". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Initiating Holders" . . . . . . . . . . . . . . . . . . . . . . . . 1
"Investors". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Lock-Up Period" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Merger" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Options". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Permitted Transferees". . . . . . . . . . . . . . . . . . . . . . . 2
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Piggyback Notice" . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Piggyback Registration" . . . . . . . . . . . . . . . . . . . . . . 2
"Principals" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Registrable Securities" . . . . . . . . . . . . . . . . . . . . . . 2
"Registration Expenses". . . . . . . . . . . . . . . . . . . . . . . 2
"Request Deadline" . . . . . . . . . . . . . . . . . . . . . . . . . 2
"SEC". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Securities Act" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Shelf Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Shelf Registration Statement" . . . . . . . . . . . . . . . . . . . 2
"Stock Issuance Agreements". . . . . . . . . . . . . . . . . . . . . 2
"Transfer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Restrictions on Transfer of Registrable Securities . . . . . . . 3
2.1 Lock-Up Period . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Permitted Transfers. . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Restrictions on Permitted Transfers by Principals. . . . . . . . 3
2.4 Rights of Subsequent Holder. . . . . . . . . . . . . . . . . . . 4
2.5 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Demand for Registration. . . . . . . . . . . . . . . . . . . . . 4
3.1 Demand Period. . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Request Procedure. . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Priority on Demand Registration. . . . . . . . . . . . . . . . . 5
3.4 Company's Ability to Postpone. . . . . . . . . . . . . . . . . . 6
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<PAGE>
3.5 Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Limitation on Demand Registration. . . . . . . . . . . . . . . . 6
3.7 Effective Registration . . . . . . . . . . . . . . . . . . . . . 6
Section 4. Piggyback Registrations. . . . . . . . . . . . . . . . . . . . . 7
4.1 Right to Piggyback . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Priority on Primary Registrations. . . . . . . . . . . . . . . . 7
4.3 Priority on Secondary Registrations. . . . . . . . . . . . . . . 7
4.4 Selection of Underwriters. . . . . . . . . . . . . . . . . . . . 7
Section 5. Right to Deny Registration . . . . . . . . . . . . . . . . . . . 7
Section 6. Holdback Agreements. . . . . . . . . . . . . . . . . . . . . . . 7
Section 7. Registration Procedures. . . . . . . . . . . . . . . . . . . . . 8
7.1 Obligations of the Company . . . . . . . . . . . . . . . . . . . 8
7.1.1 Registration Statement . . . . . . . . . . . . . . . . . . 8
7.1.2 Amendments and Supplements. . . . . . . . . . . . . . . . 8
7.1.3 Provision of Copies . . . . . . . . . . . . . . . . . . . 8
7.1.4 Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . 8
7.1.5 Antifraud Rules. . . . . . . . . . . . . . . . . . . . . . 9
7.1.6 Securities Exchange Listings. . . . . . . . . . . . . . . 9
7.1.7 Transfer Agent and Registrar . . . . . . . . . . . . . . . 9
7.1.8 Underwriting Agreements . . . . . . . . . . . . . . . . . 9
7.1.9 Due Diligence. . . . . . . . . . . . . . . . . . . . . . . 9
7.1.10 Compliance; Earning Statement . . . . . . . . . . . . . . 9
7.1.11 Deemed Underwriters or Controlling Persons. . . . . . . . 9
7.1.12 Management Availability . . . . . . . . . . . . . . . . . 10
7.1.13 Stop Orders . . . . . . . . . . . . . . . . . . . . . . . 10
7.1.14 Comfort Letter. . . . . . . . . . . . . . . . . . . . . . 10
7.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 Notice to Suspend Offers and Sales . . . . . . . . . . . . . . . 10
Section 8. Registration Expenses. . . . . . . . . . . . . . . . . . . . . . 10
8.1 Expenses Borne by Company. . . . . . . . . . . . . . . . . . . . 10
8.2 Expenses Borne by Selling Holders. . . . . . . . . . . . . . . . 10
Section 9. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 10
9.1 Indemnification by Company . . . . . . . . . . . . . . . . . . . 10
9.2 Indemnification by Holder. . . . . . . . . . . . . . . . . . . . 11
9.3 Assumption of Defense by Indemnifying Party. . . . . . . . . . . 11
9.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 11
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<PAGE>
Section 10. Participation in Underwritten Registrations. . . . . . . . . . . 12
Section 11. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.1 No Inconsistent Agreements . . . . . . . . . . . . . . . . . 12
11.2 Adjustments Affecting Securities . . . . . . . . . . . . . . 12
11.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.4 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.5 Amendments and Waivers . . . . . . . . . . . . . . . . . . . 12
11.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . 12
11.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . 12
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 13
11.9 Descriptive Headings . . . . . . . . . . . . . . . . . . . . 13
11.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 13
11.11 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this "Agreement") is
made and entered into as of this 30th day of June, 1995 by and between CRIIMI
MAE Inc., a Maryland corporation (the "Company"), and the parties set forth
in Exhibit A attached hereto (the "Investors").
WHEREAS, the Investors are acquiring simultaneously herewith shares
of the Company's common stock, par value $.01 per share ("Common Shares"), in
connection with a merger in which CRIIMI MAE Management, Inc., a Maryland
corporation and a wholly owned subsidiary of the Company ("CRIIMI
Management"), is the surviving corporation (the "Merger"); and
WHEREAS, the Investors currently are members of the Company's Board
of Directors (the "Board") and/or are officers of the Company; and
WHEREAS, it is a condition to the Merger that the parties enter into
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the parties agree as follows:
Section 1. DEFINITIONS.
"AGREEMENT" is defined in the Preamble to this Agreement.
"BOARD" is defined in the Recitals to this Agreement.
"COMMON SHARES" is defined in the Recitals to this Agreement.
"COMPANY" is defined in the Preamble to this Agreement.
"CRIIMI MANAGEMENT" is defined in the Recitals to this Agreement.
"DEMAND HOLDERS" is defined in Section 3.2.2.
"DEMAND NOTICE" is defined in Section 3.2.1.
"DEMAND REGISTRATION" is defined in Section 3.1.
"DEMAND REQUEST" is defined in Section 3.2.1.
"EMPLOYMENT AGREEMENTS" means the employment agreements between
the Principals and CRIIMI Management dated April 20, 1995, and the employment
agreements between the Investors (other than the Principals) and CRIIMI
Management dated the date of this Agreement.
"HOLDER" means any Person owning or who has the right to acquire
Registrable Securities whether or not such acquisition has actually been
effected.
"INITIATING HOLDERS" is defined in Section 3.2.1.
<PAGE>
"INVESTORS" is defined in the Preamble to this Agreement and in
Section 2.2.
"LOCK-UP PERIOD" is defined in Section 2.1.
"MERGER" is defined in the Recitals to this Agreement.
"OPTIONS" means options to purchase Common Shares issued to the
Investors pursuant to or in connection with the Employment Agreements.
"PERMITTED TRANSFERS" is defined in Section 2.2.
"PERSON" means an individual, a partnership, a joint venture, a
corporation, a trust, a limited liability company, an unincorporated
organization and government or any department or agency thereof.
"PIGGYBACK NOTICE" is defined in Section 4.1.
"PIGGYBACK REGISTRATION" is defined in Section 4.1.
"PRINCIPALS" means William B. Dockser and H. William Willoughby.
"REGISTRABLE SECURITIES" means the Common Shares issued to the
Investors on the date of this Agreement and any Common Shares issued or
issuable with respect to such Common Shares by way of replacement, share
dividend, share split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities will cease to be
Registrable Securities when they have been (a) sold to the public pursuant to
an offering registered under the Securities Act, (b) sold to the public in
compliance with Rule 144 under the Securities Act (or any similar rule then
in force) or (c) otherwise transferred and the Company has delivered a new
certificate or other evidence of ownership for such securities not bearing a
legend restricting further transfer.
"REGISTRATION EXPENSES" is defined in Section 8.1.
"REQUEST DEADLINE" is defined in Section 3.2.1.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar federal law then in force.
"SHELF PERIOD" is defined in Section 3.5.
"SHELF REGISTRATION STATEMENT" means a shelf registration
statement filed with the Commission pursuant to Rule 415 of Regulation C
under the Securities Act (or any successor rule).
"STOCK ISSUANCE AGREEMENTS" means the Stock Issuance Agreements
dated the date hereof between the Company and each of the Investors other
than the Principals.
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<PAGE>
"TRANSFER" is defined in Section 2.1.
Section 2. RESTRICTIONS ON TRANSFER OF REGISTRABLE SECURITIES.
2.1 LOCK-UP PERIOD. Without the express prior written consent of
the Company, each of the Investors severally agrees that, except as set forth
in Section 2.2, he or she will not, directly or indirectly, offer, sell,
contract to sell or otherwise dispose of (or announce any offer, sale,
contract of sale or other disposition of) ("Transfer") any Registrable
Securities for a period ending on the earlier of (a) three (3) years after
the date of this Agreement or (b) the date the employment of an Investor
terminates unless such termination is for Cause (as defined in the Employment
Agreements) or is a result of such Investor's voluntary resignation (the
"Lock-Up Period").
2.2 PERMITTED TRANSFERS. Subject to the terms of the Stock
Issuance Agreements and except as set forth in Section 2.3, the restrictions
contained in this Section 2 will not apply with respect to any of the
following transactions (each, a "Permitted Transfer"):
2.2.1 an Investor who is a natural person may Transfer
Registrable Securities to (a) his or her spouse, children of a spouse,
siblings, parents or any natural or adopted children or other descendants or
to any personal trust in which such family members or such Investor retain
the entire beneficial interest or to any charitable trust in which such
family members or such Investor has some beneficial interest or (b) one or
more entities that are wholly owned and controlled, legally and beneficially,
by such Investor;
2.2.2 an Investor that is a corporation, partnership or
other business entity and a transferee pursuant to a Permitted Transfer may
Transfer Registrable Securities (a) to one or more other entities that are
wholly owned and controlled, legally and beneficially, by such Investor or by
a Person or Persons that directly or indirectly wholly owns and controls such
Investor or (b) by distributing such Registrable Securities in a liquidation,
winding up or otherwise without consideration to the equity owners of such
corporation, partnership or business entity or to any other corporation,
partnership or business entity that is wholly owned by such equity owners;
2.2.3 an Investor may Transfer Registrable Securities on his
or her death to such Investor's estate, executor, administrator or personal
representative or to such Investor's beneficiaries, including charitable
beneficiaries, pursuant to a devise or bequest or by the laws of descent and
distribution;
2.2.4 an Investor may Transfer Registrable Securities either
as a bona fide inter vivos gift or bequest to any charity, to any public or
private charitable foundation, or to any trust for the benefit of charity
such as a charitable remainder or charitable lead trust; and
2.2.5 an Investor may Transfer Registrable Securities
pursuant to a pledge, grant of security interest or other encumbrance
effected in a bona fide transaction with an unrelated and unaffiliated
institutional lender.
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<PAGE>
If any Investor Transfers Registrable Securities as described in this Section
2.2, such Registrable Securities shall remain subject to this Agreement and,
as a condition of the validity of such Transfer, the transferee (and any
pledgee or other Person acquires Common Shares upon foreclosure thereof)
shall be required to execute and deliver a counterpart of this Agreement.
Thereafter, such transferee shall be deemed to be an Investor for purposes of
this Agreement.
2.3 RESTRICTIONS ON PERMITTED TRANSFERS BY PRINCIPALS.
Notwithstanding the foregoing, during the Lock-Up Period the number of
Registrable Securities which a Principal may dispose of by a Permitted
Transfer shall not equal or exceed fifty percent (50%) of the Common Shares
issued to such Principal in the Merger, as adjusted to account for any Common
Shares issued or issuable with respect to such Common Shares by way of
replacement, share dividend, share split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization.
2.4 RIGHTS OF SUBSEQUENT HOLDER. Subject to the foregoing
restrictions, the Company and the Investors hereby agree that any subsequent
Holder of Registrable Securities shall be entitled to all benefits hereunder
as a Holder of such securities; provided, however, that any securities
constituting "Excess Stock" under the Company's Articles of Incorporation
shall not constitute Registrable Securities under this Agreement and shall
not entitle the holder thereof to the benefits hereunder as a Holder of
Registrable Securities.
2.5 LEGEND. Each certificate representing the Registrable
Securities shall bear a legend substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS OF A REGISTRATION RIGHTS AND LOCK-UP
AGREEMENT WITH CRIIMI MAE INC. DATED JUNE 30, 1995 AND
MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH.
IN ADDITION, SUCH SHARES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED, OR
HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE REGISTERED
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
CRIIMI MAE INC. IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.
Section 3. DEMAND REGISTRATION.
3.1 DEMAND PERIOD. Commencing 90 days prior to the end of the
Lock-Up Period, subject to the terms and conditions set forth herein, the
Holders as a group will have a total of two (2) opportunities, in addition to
other rights enumerated in this Agreement, to request registration under the
Securities Act of all or part of their Registrable Securities (a "Demand
Registration"), provided that the earliest effective date of any such
registration shall be the first business day following the end of the Lock-Up
Period.
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<PAGE>
3.2 REQUEST PROCEDURE.
3.2.1 Holders of not less than 50,000 issued and outstanding
Common Shares that are Registrable Securities may make a written request (a
"Demand Request") for a Demand Registration. A Demand Request from any
Holder or Holders (the "Initiating Holders") shall (a) set forth the number
of Registrable Securities intended to be sold pursuant to the Demand
Registration, (b) disclose whether all or any portion of a distribution
pursuant to such a registration will be sought by means of an underwriting,
and (c) disclose the identification of any underwriter or underwriters
proposed for the underwritten portion, if any, of such registration. Within
10 days after receipt of such Demand Request, the Company will give written
notice (the "Demand Notice") of such request to all other Holders. The
Company will include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion
therein within 15 days after the Company's notice is sent (the "Request
Deadline"). Each Demand Request in response to the Company's notice shall
specify the information described in clauses (a), (b) and (c) above.
3.2.2 The Company shall, subject to the provisions of
Sections 3.2.3 and 8, (a) use its best efforts to prepare and file as soon as
practicable with the SEC a registration statement under the Securities Act
with respect to all the Registrable Securities that the Initiating Holders
and other Holders (the "Demand Holders") requested in a timely fashion to be
registered in the Demand Requests, (b) use its best efforts to cause such
registration statement to become effective as soon as practicable (but in no
event earlier than the end of the Lock-Up Period), and (c) keep such
registration statement effective until the earlier of (i) such time as the
Demand Holders shall have sold or otherwise disposed of all of their
Registrable Securities included in the registration, or (ii) nine months
following the effective date of such registration.
3.2.3 If the Demand Holders desire to distribute all or part
of the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company in writing in the Demand
Request as described in Section 3.2.1. A determination of whether all or
part of the distribution will be by means of an underwriting shall be made by
Demand Holders holding a majority of the Registrable Securities to be
included in the registration. If all or part of the distribution is to be by
means of an underwriting, all subsequent decisions concerning the
underwriting which are to be made by the Demand Holders pursuant to the terms
of this Agreement, which shall include the selection of the underwriter or
underwriters to be engaged and the representative, if any, of the
underwriters so engaged, shall be made by the Demand Holders of a majority of
the Registrable Securities to be included in the underwriting, subject to
approval by the Board, which approval shall not be withheld unreasonably.
Within ten (10) days after the Request Deadline, the Company shall give
written notice informing all Demand Holders whether all, part or none of the
distribution is expected to be made by means of an underwriting, and, if more
than one means of distribution is contemplated, may require Demand Holders to
notify the Company of the means of distribution of their Registrable
Securities to be included in the registration. The right of any Demand
Holder to include all or any portion of its Registrable Securities in an
underwriting shall be conditioned upon the Company's having received a timely
written request for such inclusion in the Demand Request (which right shall
be further conditioned to the extent provided in this Agreement). All Demand
Holders proposing to distribute their Registrable Securities through an
underwriting shall (together with the Company as provided in Section 7.1.8)
enter into an underwriting agreement in customary form with the underwriter
or underwriters selected for such underwriting.
3.2.4 Notwithstanding any other provision of this Section 3,
if an underwriter advises the Demand Holders in writing that marketing
factors require a limitation on the number of shares
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<PAGE>
to be underwritten, then the number of shares of Registrable Securities that
may be included in the underwriting shall be allocated among the Demand
Holders in proportion (as nearly as practicable) to the respective amounts of
Registrable Securities each Demand Holder otherwise sought to have registered
pursuant to its Demand Request (or in such other proportion as they shall
mutually agree). Registrable Securities excluded or withdrawn from the
underwriting in accordance with this Section 3.2.4 shall be withdrawn from
the registration.
3.3 PRIORITY ON DEMAND REGISTRATION. The Company will not
include in any Demand Registration any securities which are not Registrable
Securities without the prior written consent of the holders of a majority of
the shares of Registrable Securities included in such registration. If a
Demand Registration is an underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering exceeds the number of securities that can be sold
in an orderly manner in such offering within a price range acceptable to the
Holders of a majority of the shares of Registrable Securities requesting
registration, the Company will include in such registration prior to the
inclusion of any securities which are not Registrable Securities the number
of shares of Registrable Securities requested to be included that in the
opinion of such underwriters can be sold in an orderly manner within such
acceptable price range, pro rata among the respective Holders thereof on the
basis of the number of shares of Registrable Securities owned by each such
Holder.
3.4 COMPANY'S ABILITY TO POSTPONE. The Company shall have the
right to postpone the filing of a registration statement under Section 3.2.2
for a reasonable period of time (not exceeding 90 days) if the Company
furnishes the holders of Registrable Securities requesting registration a
certificate signed by the Chairman of the Board or the President of the
Company stating that, in his good faith judgment, he has determined that
effecting the registration at such time would adversely affect a material
financing, acquisition, disposition of assets or stock, merger or other
comparable transaction.
3.5 SHELF REGISTRATION. If, at the time of a Demand Request, a
Shelf Registration Statement is effective (or in the case of a Demand Request
made prior to the end of the Lock-Up Period, will be effective as of the
first business day following the end of the Lock-Up Period) and may be used
for the registration and sale of the Registrable Securities which are the
subject of the Demand Request, the Company shall so advise the Holders,
including the Initiating Holders, in the Demand Notice and any Holders
wishing to include Registrable Securities in such Shelf Registration
Statement shall so advise the Company in a Demand Request by the Response
Deadline. The Company shall not be obligated to file a Demand Registration
statement if such a Shelf Registration Statement is available. The Company
agrees to use its reasonable efforts to keep such Shelf Registration
Statement continuously effective for a period commencing no sooner than the
first business day after the end of the Lock-Up Period and expiring on the
earlier of (a) the date on which all of the Registrable Securities covered by
the Shelf Registration Statement have been sold pursuant thereto and (b) nine
months after the Registrable Securities are saleable pursuant to the Shelf
Registration Statement (the "Shelf Period"). The Company further agrees to
amend the Shelf Registration Statement if and as required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration Statement or by the Securities Act or any
rules and regulations thereunder. The Company may, in the exercise of its
sole discretion, extend the Shelf Registration Statement for a period beyond
the Shelf Period but shall in no event be required to do so.
3.6 LIMITATION ON DEMAND REGISTRATION. Notwithstanding any
provision of this Agreement to the contrary, the Company shall not be
obligated to honor any Demand Request if (a) it has,
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<PAGE>
within the 12-month period immediately preceding such Demand Request,
received a Demand Request pursuant to which a Demand Registration became
effective; (b) at the time of the Demand Request, a Shelf Registration
Statement is available in accordance with Section 3.5; (c) a Piggyback
Registration is available pursuant to Section 4 for the registration of the
Registrable Securities covered by the Demand Request or a Piggyback Notice
with respect to such a Piggyback Registration was delivered by the Company
within 30 days prior to the Demand Request; or (d) registration is not
required under Section 5 of the Securities Act.
3.7 EFFECTIVE REGISTRATION. A registration will not count as a
Demand Registration until it has become effective (unless the Holders
demanding such registration withdraw all of the Registrable Securities, in
which case such demand will count as a Demand Registration unless the holders
of such Registrable Securities agree to pay all Registration Expenses).
Section 4. PIGGYBACK REGISTRATIONS.
4.1 RIGHT TO PIGGYBACK. After the end of the Lock-Up Period, if
the Company proposes to undertake an offering of Common Shares for its
account or the account of others and the registration form to be used for
such offering may be used for the registration of Registrable Securities (a
"Piggyback Registration"), the Company will give prompt written notice to all
Holders of its intention to effect such a registration (each, a "Piggyback
Notice") and, subject to Sections 4.2, 4.3 and 5, the Company will include in
such registration all Registrable Securities with respect to which the
Company has received written requests ("Piggyback Requests") for inclusion
therein within 15 days after the date of sending the Piggyback Notice.
4.2 PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Company, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number that can be sold in an orderly manner within
a price range acceptable to the Company, the Company will include in such
registration (a) first, the securities the Company proposes to sell and (b)
second, if any, the Registrable Securities requested to be included in such
Registration and any other securities requested to be included in such
registration that are held by Persons other than the Holders of Registrable
Securities pursuant to registration rights, pro rata among the Holders of
Registrable Securities and the holders of such other securities requesting
such registration on the basis of the number of shares of such securities
owned by each such holder.
4.3 PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders
of the Company's securities other than the Holders, and the managing
underwriters advise the Company in writing that in their opinion the number
of securities requested to be included in such registration exceeds the
number that can be sold in an orderly manner in such offering within a price
range acceptable to the holders initially requesting such registration, the
Company will include in such registration (a) first, the securities requested
to be included therein by the holders requesting such registration and (b)
second, if any, the Registrable Securities requested to be included in such
registration, pro rata among the Holders requesting such registration on the
basis of the number of shares of such securities owned by each such Holder.
4.4 SELECTION OF UNDERWRITERS. In the case of an underwritten
Piggyback Registration, the Company will have the right to select the
investment banker(s) and manager(s) to administer the offering.
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Section 5. RIGHT TO DENY REGISTRATION. Notwithstanding the
provisions of Sections 3 or 4, the Company shall not be required to register
Registrable Securities if, within 25 days of its receipt of a Demand Request
or a Piggyback Request or at any time a registration statement pursuant to
Section 3 or 4 is effective, counsel for the Company delivers an opinion to
the Holder of such Registrable Securities that the entire amount of
Registrable Securities proposed to be sold by such Holder may be sold
pursuant to the provisions of Rule 144 under the Securities Act (or any
successor rule) within a period of not more than 90 days from the date of
such opinion or otherwise does not require registration under the Securities
Act.
Section 6. HOLDBACK AGREEMENTS. The Company agrees (a) not to
effect any public sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such
securities, during the 10-day period prior to and during the 60-day period
following the effective date of any underwritten Demand Registration (except
pursuant to (i) registrations on Form S-8 or any successor form, (ii)
registrations on Form S-4 or any successor form, (iii) registrations of
Common Shares in connection with the exercise of outstanding warrants, and
(iv) registrations of securities in connection with a dividend reinvestment
plan, if any, of the Company on form(s) applicable to such securities) unless
the underwriters managing the registered public offering otherwise agree, and
(b) to use its reasonable efforts to obtain agreements from its officers,
directors and affiliated stockholders (including, without limitation, each
holder of more than five percent (5%) of the outstanding Common Shares), not
to effect any public sale or distribution (including sales pursuant to Rule
144) of any such securities during such period (except as part of such
underwritten registration, if otherwise permitted), unless the underwriters
managing the registered public offering otherwise agree. The initial
Investors agree to the restriction set forth in clause (b) of the immediately
preceding sentence.
Section 7. REGISTRATION PROCEDURES. Whenever the Holders have
requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its reasonable best efforts to effect the
registration and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof and pursuant thereto the Company
will as expeditiously as possible:
7.1 OBLIGATIONS OF THE COMPANY.
7.1.1 REGISTRATION STATEMENT. Prepare and file with the SEC
(except with respect to a Shelf Registration Statement which is already
effective) a registration statement with respect to such Registrable
Securities and use its reasonable efforts to cause such registration
statement to become effective (PROVIDED that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
will upon request, to the extent practicable, furnish to the counsel selected
by the Holders of a majority of the Registrable Securities covered by such
registration statement copies of all such documents proposed to be filed,
which documents will be subject to the reasonable review of such counsel);
7.1.2 AMENDMENTS AND SUPPLEMENTS. Prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for the period required by the intended
method of disposition or to describe the terms of any offering made from an
effective Shelf Registration Statement, and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement;
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<PAGE>
7.1.3 PROVISION OF COPIES. Furnish to each seller of
Registrable Securities the number of copies of such registration statement,
each amendment and supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
7.1.4 BLUE SKY LAWS. Use its reasonable efforts to register
or qualify such Registrable Securities under the securities or blue sky laws
of such jurisdictions as any seller reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller (PROVIDED that the Company will
not be required to (a) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section
7.1.4, (b) subject itself to taxation in any such jurisdiction, (c) consent
to general service of process in any such jurisdiction, or (d) qualify such
Registrable Securities in a given jurisdiction where, in the sole discretion
of the Company, expressions of investment interest are not sufficient in such
jurisdiction to reasonably justify the expense of qualification in that
jurisdiction or where such qualification would require the Company to
register as a broker or dealer in such jurisdiction);
7.1.5 ANTIFRAUD RULES. Notify each seller of such
Registrable Securities at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event known to the Company as a result of which the prospectus included in
such registration statement contains an untrue statement of a material fact
or omits any material fact necessary to make the statements therein not
misleading, and in such event, at the request of any such seller, the Company
will prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading;
7.1.6 SECURITIES EXCHANGE LISTINGS. Cause all such
Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed and qualify such
Registrable Securities for trading on each system on which similar securities
issued by the Company are from time to time qualified;
7.1.7 TRANSFER AGENT AND REGISTRAR. Provide a transfer
agent and registrar for all such Registrable Securities not later than the
effective date of such registration statement and thereafter maintain such a
transfer agent and registrar;
7.1.8 UNDERWRITING AGREEMENTS. Enter into such customary
agreements (including underwriting agreements in customary form) and take all
such other actions as the holders of a majority of the Registrable Securities
being sold or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities;
7.1.9 DUE DILIGENCE. Make available for inspection by any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such underwriter, attorney, accountant or agent in
connection with such registration statement;
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7.1.10 COMPLIANCE; EARNING STATEMENT. Otherwise use its
best efforts to comply with all applicable rules and regulations of the SEC,
and make available to its securityholders, as soon as reasonably practicable,
an earning statement covering a period of at least 12 months beginning with
the first day of the Company's first full calendar quarter after the
effective date of the registration statement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
7.1.11 DEEMED UNDERWRITERS OR CONTROLLING PERSONS. Permit
any Holder which, in the Company's sole and exclusive judgment, might be
deemed to be an underwriter or a controlling person of the Company, to
participate in the preparation of such registration or comparable statement
and to require the insertion therein of material, furnished to the Company in
writing, which in the reasonable judgment of such Holder and its counsel
should be included;
7.1.12 MANAGEMENT AVAILABILITY. In connection with
underwritten offerings, make available appropriate management personnel for
participation in the preparation and drafting of such registration or
comparable statement, for due diligence meetings and for "road show" meetings;
7.1.13 STOP ORDERS. In the event of the issuance of any
stop order suspending the effectiveness of a registration statement, or of
any order suspending or preventing the use of any related prospectus or
suspending the qualification of any common stock included in such
registration statement for sale in any jurisdiction, the Company will use its
reasonable efforts promptly to obtain the withdrawal of such order; and
7.1.14 COMFORT LETTER. Obtain a comfort letter from the
Company's independent public accountants addressed to the selling Holders of
Registrable Securities in customary form and covering such matters of the
type customarily covered by comfort letters as the Holders of a majority of
the Registrable Securities being sold reasonably request.
7.2 FURTHER ASSURANCES. The Company may require each Holder of
Registrable Securities to furnish to the Company in writing such information
regarding the proposed distribution by such Holder of such Registrable
Securities as the Company may from time to time reasonably request in writing.
7.3 NOTICE TO SUSPEND OFFERS AND SALES. Each Investor severally
agrees that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Sections 7.1.5 or 7.1.13, such Investor
will forthwith discontinue disposition of Common Shares pursuant to a
registration hereunder until receipt of the copies of an appropriate
supplement or amendment to the prospectus under Section 7.1.5 or until the
withdrawal of such order under Section 7.1.13.
Section 8. REGISTRATION EXPENSES.
8.1 EXPENSES BORNE BY COMPANY. Except as specifically otherwise
provided in Section 8.2, the Company will be responsible for payment of all
expenses incident to any registration hereunder, including without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for the Company and all
independent certified public accountants and other
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<PAGE>
Persons retained by the Company (all such expenses borne by the Company
herein called the "Registration Expenses").
8.2 EXPENSES BORNE BY SELLING HOLDERS. The selling Holders will
be responsible for payment of their own legal fees, underwriting fees and
brokerage discounts, commissions and other sales expenses incident to any
registration hereunder, with any such expenses which are common to the
selling Holders divided among such Holders (including the Company and holders
of the Company's securities other than Registrable Securities, to the extent
that securities are being registered on behalf of such Persons) pro rata on
the basis of the number of shares being registered on behalf of each such
Holder, or as such Holders may otherwise agree.
Section 9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY COMPANY. The Company agrees to indemnify,
to the extent permitted by law, each Holder, its officers, directors and
trustees and each Person who controls (within the meaning of the Securities
Act) such Holder against all losses, claims, damages, liabilities and
expenses caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company
by such Holder expressly for use therein or by such Holder's failure to
deliver a copy of the registration statement or prospectus or any amendments
or supplements thereto after the Company has furnished such Holder with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls (within the meaning of the Securities
Act) such underwriters at least to the same extent as provided above with
respect to the indemnification of the Holders of Registrable Securities.
9.2 INDEMNIFICATION BY HOLDER. In connection with any
registration statement in which a Holder is participating, each such Holder
will furnish to the Company in writing such information as the Company
reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, will indemnify
the Company, its directors and officers and each Person who controls (within
the meaning of the Securities Act) the Company against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged untrue
statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
but only to the extent that such untrue statement or omission is contained in
any information so furnished in writing by such Holder; PROVIDED that the
obligation to indemnify will be limited to the net amount of proceeds
received by such Holder from the sale of Registrable Securities pursuant to
such registration statement. In connection with an underwritten offering,
each such Holder will indemnify such underwriters, their officers and
directors and each Person who controls (within the meaning of the Securities
Act) such underwriters at least to the same extent as provided above with
respect to the indemnification of the Company.
9.3 ASSUMPTION OF DEFENSE BY INDEMNIFYING PARTY. Any Person
entitled to indemnification hereunder will (a) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification and (b) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably
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<PAGE>
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent will not
be unreasonably withheld). An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect
to such claim.
9.4 BINDING EFFECT. The indemnification provided for under this
Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and will survive the
transfer of securities. The Company also agrees to make such provisions, as
are reasonably requested by any indemnified party, for contribution to such
party in the event the Company's indemnification is unavailable for any
reason. Each Holder also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such party in the
event such Holder's indemnification is unavailable for any reason.
Section 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person
may participate in any registration hereunder which is underwritten unless
such Person (a) agrees to sell such Person's securities on the basis provided
in any underwriting arrangements approved by the Person or Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Section 11. MISCELLANEOUS.
11.1 NO INCONSISTENT AGREEMENTS. The Company will not hereafter
enter into any agreement with respect to its securities which violates the
rights granted to the Holders in this Agreement.
11.2 ADJUSTMENTS AFFECTING SECURITIES. The Company will not
effect a stock split or a combination of shares or a similar reclassification
of its securities which would materially and adversely affect the
marketability of such securities in any registration undertaken pursuant to
this Agreement.
11.3 REMEDIES. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in
its sole discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
11.4 TERM. Except as specifically otherwise provided herein,
the provisions of this Agreement shall apply until the earliest of such time
as (a) all Registrable Securities have ceased to be Registrable Securities
hereunder, (b) all remaining Registrable Securities that have not been resold
to the public may be resold pursuant to Rule 144 under the Securities Act
within a three month period, or (c) 10 years from the date of this Agreement.
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<PAGE>
11.5 AMENDMENTS AND WAIVERS. The provisions of this Agreement
may be amended or waived only upon the prior written consent of the Company
and Holders of a majority of the then outstanding Registrable Securities.
11.6 SUCCESSORS AND ASSIGNS. Subject to Section 2, all
covenants and agreements in this Agreement by or on behalf of any of the
parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not. In
addition, whether or not any express assignment has been made but subject in
any case to Section 2, the provisions of this Agreement which are for the
benefit of purchasers or Holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent Holder of such securities.
11.7 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
11.8 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken
together will constitute one and the same Agreement.
11.9 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
11.10 GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and
construed in accordance with the domestic laws of the State of Maryland,
without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of Maryland or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Maryland.
11.11 NOTICES. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable express
courier service (charges prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications will be sent to each Investor at the address
indicated on the records of the Company and to the Company at the address
indicated below:
CRIIMI MAE Inc.
11200 Rockville Pike
Rockville, Maryland 20852
Attention: Deborah A. Linn, General Counsel
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
signed by its duly authorized officer, and each of the Investors has signed
this Agreement, all as of the date first above written.
CRIIMI MAE INC.
By: /s/
-----------------------------------
Name: H. William Willoughby
Title: President
THE INVESTORS:
/s/
----------------------------------------
William B. Dockser
/s/
----------------------------------------
H. William Willoughby
/s/
----------------------------------------
Jay R. Cohen
/s/
----------------------------------------
Frederick J. Burchill
/s/
----------------------------------------
Deborah A. Linn
/s/
----------------------------------------
Cynthia O. Azzara
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<PAGE>
EXHIBIT A
William B. Dockser
H. William Willoughby
Jay R. Cohen
Frederick J. Burchill
Deborah A. Linn
Cynthia O. Azzara
<PAGE>
EXHIBIT 3
<PAGE>
June 30, 1995
CRIIMI MAE Inc.
11200 Rockville Pike
Rockville, Maryland 20852
Gentlemen:
Reference is made to Article EIGHTEENTH ("Article EIGHTEENTH") of the
Articles of Incorporation of CRIIMI MAE Inc., a Maryland corporation ("CRIIMI
MAE"), and to the Agreement and Plan of Merger, dated April 20, 1995, as
amended as of June 20, 1995, among CRIIMI MAE, CRIIMI MAE Management Corp., a
Maryland corporation, CRICO Mortgage Company, Inc., a Delaware corporation,
CRI/AIM Management, Inc., a Delaware corporation, CRI Acquisition, Inc., a
Maryland corporation, and the undersigned (the "Merger Agreement").
Capitalized terms used and not defined herein shall have the meanings
ascribed to them in the Merger Agreement.
Pursuant to Section 5.15 of the Merger Agreement, each of the
undersigned agrees that, after his acquisition on the date hereof of Common
Shares and options to purchase Common Shares, and notwithstanding the
provisions of paragraph (E) of Article EIGHTEENTH, he will not acquire
"ownership" (as defined in paragraph (C) of Article EIGHTEENTH) of any
additional Common Shares to the extent that after such acquisition he would
have ownership in the aggregate of more than 9.8% of the outstanding Common
Shares. Each of the undersigned further agrees that any such additional
Common Shares shall be deemed "Excess Shares" as defined in Article
EIGHTEENTH and shall be subject to the treatment prescribed therein for
Excess Shares. This agreement shall remain in effect for so long as the
restrictions set forth in paragraph (C) of Article EIGHTEENTH remain in
effect.
/s/
------------------------------
William B. Dockser
/s/
------------------------------
H. William Willoughby
<PAGE>
EXHIBIT 4
<PAGE>
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is made and entered into
effective as of June 30, 1995 (the "Effective Time"), by and between CRIIMI
MAE Inc., a Maryland corporation (the "Company"), and H. William Willoughby
(the "Executive"), a resident of the Commonwealth of Virginia.
RECITALS
R-1. CRIIMI MAE Management, Inc. ("CRIIMI Management"), an affiliate of
the Company, employs the Executive in a key professional capacity, pursuant
to an Employment and Non-Competition Agreement (the "Employment Agreement")
made effective as of the Effective Time.
R-2. The Company wishes to provide to the Executive opportunities to
purchase shares of the Company's common stock (the "Common Stock"), upon the
terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
agree as follows:
1. GRANT OF OPTIONS; OPTION PRICES. Subject to the provisions set
forth in this Agreement, the Company grants to the Executive, and the
Executive accepts from the Company, an option (upon each partial or a total
exercise, an "Option") to purchase from the Company up to (a) One Million
(1,000,000) shares of Common Stock for a purchase price (the "First Option
Price") of One Dollar and Fifty Cents ($1.50) per share more than the
aggregate average of the high and low sales prices of a share of Common Stock
during the ten (10) trading days immediately preceding the Effective Time
(the "Trading Price") and (b) Five Hundred Thousand (500,000) shares of
Common Stock for a purchase price (the "Second Option Price") of Four Dollars
($4.00) per share more than the Trading Price, but in no event shall either
Option Price be less than the fair market value of a share of Common Stock on
the Effective Time. The First Option Price and the Second Option Price are
subject to adjustment as set forth in Section 2 below.
2. COMMON STOCK; ADJUSTMENTS.
A. TYPE OF STOCK. Common Stock issued pursuant to this Agreement
may be authorized but unissued Common Stock or authorized and issued Common
Stock held in the Company's treasury or acquired by the Company for the
purposes of this Agreement. The Company may direct that any certificate
evidencing Common Stock issued pursuant to this Agreement shall bear a legend
setting forth such restrictions on transferability as may apply to such
shares. All such shares of Common Stock are referred to in this Agreement as
"Option Shares".
<PAGE>
B. CHANGE IN NUMBER OF SHARES. If there is any change in the
number of shares of Common Stock through the declaration of stock dividends,
recapitalization resulting in stock splits, or combinations or exchanges of
such shares, then the number of shares of Common Stock available for each
outstanding Option and the number of such shares covered by each outstanding
Option, and the Option Price per share applicable under each outstanding
Option, shall be proportionately adjusted to reflect any increase or decrease
in the number of issued shares of Common Stock; PROVIDED HOWEVER, that any
fractional shares resulting from any such adjustment shall be eliminated.
C. DISSOLUTION OR LIQUIDATION. In the event of a proposed
dissolution or liquidation of the Company, each outstanding Option granted
under this Agreement shall terminate as of a date to be fixed by the Company;
PROVIDED HOWEVER, that the Executive shall have the right, immediately prior
to such termination, to exercise such outstanding Options as to all or any
part of the shares of Common Stock covered thereby, including shares as to
which such outstanding Options would not otherwise be exercisable.
D. CORPORATE REORGANIZATION. If there is any change in the
number of outstanding shares of Common Stock by reason of merger,
consolidation, spinoff or other corporate reorganization in which the Company
is the surviving corporation, the number of shares of Common Stock available
for issuance both in the aggregate and with respect to each outstanding
Option, and the Option Price per share applicable under each outstanding
Option, shall be equitably adjusted by the Company, whose determination shall
be final, binding and conclusive. In the event of any merger, consolidation
or combination of the Company with or into another corporation (other than a
merger, consolidation or combination in which the Company is the surviving
corporation and which does not result in any reclassification or other change
in the number of outstanding shares of Common Stock), the Executive shall
have the right thereafter and during the term of each such Option to receive,
after such Option is duly exercised in accordance with the terms of this
Agreement, for each share of Common Stock as to which the Option shall be
exercised, the kind and amount of shares of the surviving or new corporation,
cash, securities, evidence of indebtedness, other property or any combination
thereof which would have been received upon such merger, consolidation or
combination by the holder of one share of Common Stock immediately prior to
such merger, consolidation or combination.
E. CHANGE IN COMMON STOCK. In the event of a change in the
Common Stock as presently constituted, which is limited to a change of all of
its authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any such
change shall be deemed to be Common Stock within the meaning of this
Agreement.
F. ADJUSTMENTS BY COMPANY. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments
shall be made by the President
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<PAGE>
of the Company, or the President's designee, whose determination in that
respect shall be final, binding and conclusive.
G. NO OTHER RIGHTS. Except as expressly provided in this Section
2, the Executive shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock
of any class or by reason of any dissolution, liquidation, merger, or
consolidation, and any issue by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
the number shares of Common Stock subject to an Option. The grant of the
Options pursuant to this Agreement shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure or to merge or to consolidate
or to dissolve, liquidate or sell, or transfer all or any part of its
business or assets.
3. TIMING OF EXERCISE; VESTING SCHEDULE.
A. TIMING. Subject to the vesting schedule set forth in Section
2.B. below and earlier termination as provided in Section 5 below, an Option
may be exercised at any time or from time to time prior to the close of
business on the day before the eighth anniversary of the Effective Time.
B. VESTING SCHEDULE. The right to purchase Option Shares is
limited to Options which have vested. Subject to Section 2 above and Section
5 below, the Executive's rights to exercise Options to purchase Option Shares
shall vest in accordance with the following schedule:
(i) such rights shall vest as to one-fifth (1/5) of the Option
Shares available for each of the First Option Price and the
Second Option Price on the first anniversary of the
Effective Time;
(ii) such rights shall vest as to a second one-fifth (1/5) of the
Option Shares available for each of the First Option Price
and the Second Option Price on the second anniversary of the
Effective Time;
(iii) such rights shall vest as to a third one-fifth (1/5) of
the Option Shares available for each of the First
Option Price and the Second Option Price on the third
anniversary of the Effective Time;
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<PAGE>
(iv) such rights shall vest as to a fourth one-fifth (1/5) of the
Option Shares available for each of the First Option Price
and the Second Option Price on the fourth anniversary of the
Effective Time; and
(v) such rights shall vest as to the remaining one-fifth (1/5)
of the Option Shares available for each of the First Option
Price and the Second Option Price on the fifth anniversary
of the Effective Time.
4. MANNER OF EXERCISE. Option Shares may be purchased by giving the
Company notice of exercise of an Option sent in accordance with the notice
provisions of this Agreement. The notice shall specify the number of Option
Shares being purchased and payment in full for the Option Shares shall
accompany the notice of exercise, in cash or, with the Company's approval, in
Common Stock held by the Executive for at least six months having a fair
market value in the aggregate equal to the required payment or in a
combination of cash and such shares. No Option may be exercised at any one
(1) time for less than one hundred (100) shares of Common Stock, unless the
number of Option Shares remaining to be purchased is fewer than one hundred
(100), in which case the last Option shall be to purchase all of the
remaining Option Shares. Each Option shall be exercised in accordance with
any other administrative regulations as the Company shall from time to time
adopt.
5. TERMINATION OF EXECUTIVE'S EMPLOYMENT. Capitalized terms not
otherwise identified in this Section shall have the respective meanings
attributed to them in the Employment Agreement. The following shall be the
treatment accorded the Executive's right to exercise Options to purchase
Option Shares upon the termination of the Executive's employment by CRIIMI
Management:
(a) TERMINATION BY DEATH. If the Executive's employment is
terminated by death, any rights to exercise Options to purchase Option Shares
under this Agreement that shall not have vested pursuant to Section 3.B of
this Agreement shall vest immediately upon the death of the Executive.
(b) TERMINATION FOR CAUSE. If the Executive's employment is
terminated by CRIIMI Management for Cause, any rights to exercise Options to
purchase Option Shares under this Agreement that shall not have vested
pursuant to Section 3.B of this Agreement within thirty (30) days following
such termination shall terminate. Furthermore, all rights to exercise
Options to purchase Option Shares that are vested or will vest within such
thirty (30) day period must be exercised within one hundred eighty (180) days
following such termination of employment or such rights shall terminate.
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<PAGE>
(c) TERMINATION WITHOUT CAUSE. If the Executive's employment is
terminated by CRIIMI Management without Cause, the Executive's right to
exercise Options to purchase Option Shares in accordance with the vesting
schedule set forth in Section 3.B of this Agreement shall not be affected by
any such termination of employment without Cause.
(d) TERMINATION FOR PERMANENT DISABILITY. If the Executive's
employment is terminated by CRIIMI Management because of the Executive's
Permanent Disability, the Executive's right to exercise Options to purchase
Option Shares in accordance with the vesting schedule set forth in Section
3.B of this Agreement shall not be affected by any such termination of
employment due to Permanent Disability.
(e) INVOLUNTARY RESIGNATION. If an Involuntary Resignation of the
Executive occurs, the Executive's right to exercise Options to purchase
Option Shares in accordance with the vesting schedule set forth in Section
3.B of this Agreement shall not be affected by any such Involuntary
Resignation.
(f) VOLUNTARY RESIGNATION. If the Executive voluntarily resigns
the Executive's employment, any rights to exercise Options to purchase Option
Shares that have not vested pursuant to Section 3.B of this Agreement shall
terminate immediately upon such voluntary resignation. Furthermore, all
rights to exercise Options to purchase Option Shares that are vested must be
exercised within one hundred eighty (180) days following such voluntary
resignation or such rights shall terminate.
(g) FAILURE TO EXTEND THE TERM. If the Executive is an employee
of CRIIMI Management at the fifth anniversary of the commencement of the Term
and the Executive and CRIIMI Management have not reached mutual agreement
with respect to the Executive's continued employment by CRIIMI Management and
the Executive's employment is deemed to be terminated, the vesting schedule
and the Executive's right to exercise Options to purchase Option Shares set
forth in Section 3.B of this Agreement shall not be affected by any such
termination.
6. NON-TRANSFERABILITY OF OPTIONS. The Options granted under this
Agreement are not transferable other than by will or by the laws of descent
and distribution, and, during the Executive's lifetime, each Option may be
exercised only by the Executive, or if the Executive becomes incapacitated,
by the Executive's legally appointed representative.
7. RIGHTS AS A SHAREHOLDER. The Executive or a permitted transferee
of the Options shall have no rights as a shareholder with respect to any
shares covered by the Options until the date of the issuance of a stock
certificate to the Executive or permitted transferee for such shares. No
adjustments shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
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<PAGE>
which the record date is prior to the date such stock certificate is issued,
except as provided in Section 2 above.
8. NO GRANT OF OTHER RIGHTS. Nothing in this Agreement shall confer
upon the Executive any right to continue in the employ of CRIIMI MAE
Management, Inc., ("CRIIMI Management"), the Company or any of their
respective divisions or affiliates, or interfere in any way with the right of
CRIIMI Management, the Company or any such division or affiliate to terminate
such employment at any time.
9. AGREEMENTS REGARDING WITHHOLDING TAXES. No later than the date of
exercise of any Option granted hereunder, the Executive will pay to CRIIMI
Management or make arrangements satisfactory to CRIIMI Management regarding
payment of any federal, state or local taxes of any kind required by law to
be withheld upon the exercise of such Option, if any. The Executive may,
with CRIIMI Management's prior approval, make such payment in whole or in
part by surrendering Common Stock to CRIIMI Management, valued at its fair
market value.
10. REPRESENTATIONS AND ACKNOWLEDGEMENTS BY THE EXECUTIVE.
A. INVESTMENT INTENT; RESALE. The Executive represents, warrants
and agrees that the Executive will acquire and hold the shares purchased on
exercise of an Option for the Executive's own account for investment and not
with the view to the resale or distribution thereof, except for resales or
distributions in accordance with federal and state securities laws, and that
the Executive will not, at any time or times, directly or indirectly, offer,
sell, distribute, pledge, or otherwise grant a security interest in or
otherwise dispose of or transfer all, any portion of or any interest in, any
shares purchased on exercise of an Option (or solicit an offer to buy, take
in pledge or otherwise acquire or receive, all or any portion thereof),
except pursuant to either (i) a Registration Statement on an appropriate form
under the Securities Act of 1933, as amended (the "Act"), which Registration
Statement has become effective and is current with respect to the shares
being offered or sold, or (ii) a specific exemption from the registration
requirements of the Act. If the Company so requires, the availability of
such exemption shall be the subject matter of an opinion of counsel
reasonably acceptable to the Company that no registration under the Act is
required with respect to such offer, sale, distribution, pledge, grant or
other disposition or transfer.
B. COMPLIANCE WITH SECURITIES LAWS. The Executive understands
that the Options have been granted and the shares to be sold to the Executive
upon exercise of an Option will be sold to the Executive pursuant to
exemptions from the registration requirements in the Act until such time as
the Company shall file a Registration Statement under the Act which has
become effective and is current with respect to the shares being sold to the
Executive pursuant to an Option and, in this connection, the Company is
relying in part on the representations set forth in this Agreement.
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<PAGE>
C. INFORMATION REGARDING COMMON STOCK; USE OF PROCEEDS. The
Executive acknowledges that the Executive has received and reviewed a
description of the Common Stock of the Company contained in that certain
"Proxy Statement pursuant to Section 14(a) of the Securities Exchange Act of
1934" filed with the Securities and Exchange Commission regarding the Special
Meeting of the Stockholders of the Company held on June 21, 1995. The
Executive further acknowledges that the Executive understands that the
Company may use the proceeds from the exercise of any Option for general
corporate purposes.
11. REGISTRATION OF OPTION SHARES. The Company agrees to file with the
Securities and Exchange Commission a Registration Statement under the Act on
Form S-8 with respect to the Option Shares no later than the first
anniversary of the Effective Time.
12. OTHER PAYMENTS OR OPTIONS. Nothing contained in this Agreement
shall be deemed in any way to limit or restrict the Company from making any
option to purchase Common Stock or payment to any person under any other
plan, arrangement or understanding, whether now existing or hereafter in
effect.
13. MISCELLANEOUS.
A. NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing, and shall be deemed
properly given if delivered personally, mailed by registered or certified
mail in the United States mail, postage prepaid, return receipt requested,
sent by facsimile, or sent by Express Mail, Federal Express or other
nationally recognized express delivery service, as follows:
If to the Company:
CRIIMI MAE Inc.
11200 Rockville Pike
Rockville, MD 20852
Attention: Chairman of the Board
Fax Number: 301-231-0399
If to the Executive:
H. William Willoughby
719 Springvale Road
Great Falls, VA 22066
Notice given by hand, certified or registered mail, or by Express Mail,
Federal Express or other such express delivery service shall be effective
upon actual receipt. Notice given by
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<PAGE>
facsimile transmission shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. All notices by facsimile transmission
shall be confirmed promptly after transmission in writing by certified mail
or personal delivery. Any party may change any address to which notice is to
be given to it by giving notice as provided above of such change of address.
B. SUCCESSORS. The rights and obligations of the Company and
entity affiliates of the Company under this Agreement shall inure to the
benefit of, and shall be binding on, the Company and entity affiliates of the
Company and their respective successors and assigns, and the rights and
obligations of the Executive under this Agreement shall inure to the benefit
of, and shall be binding upon, the Executive and the Executive's heirs and
personal and legal representatives.
C. DISPUTE RESOLUTION. Any controversy or claim arising out of
or relating to this Agreement, or the breach thereof, shall be settled by
arbitration in Montgomery County, Maryland in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon
the award rendered by the arbitrator or arbitrators may be entered in any
court having jurisdiction thereof. The arbitrator or arbitrators shall be
deemed to possess the powers to issue mandatory orders and restraining orders
in connection with such arbitration. The expenses of the arbitration shall
be borne equally by the parties to the arbitration, provided that each party
shall pay for and bear the costs of its own experts and counsel's fees.
D. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with the provisions of, the law of the State of
Maryland, without reference to provisions that refer a matter to the law of
any other jurisdiction.
E. NO EFFECT ON OTHER RIGHTS. The Options granted pursuant to
this Agreement are in addition to any other rights and options which may be
granted to the Executive under any qualified, non-qualified, incentive, bonus
and other stock or stock option plans which may be adopted by the Company.
F. SURRENDER OF ORIGINAL AGREEMENT. If the Executive exercises a
single Option to purchase all of the Option Shares at one time, the
Executive's original counterpart of this Agreement shall be surrendered to
the Company for cancellation. If an Option is exercised to purchase less
than all of the remaining Option Shares to which the Executive is entitled or
a change in the number or designation of the Common Stock shall be made, the
Executive's original counterpart of this Option Agreement shall be delivered
by the Executive to the Company for the purpose of making an appropriate
notation or otherwise reflecting on such counterpart such partial exercise or
change.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement, intending to be bound legally.
THE COMPANY:
CRIIMI MAE Inc.
a Maryland corporation
By: /s/ William B. Dockser
----------------------------------
William B. Dockser, Chairman
of the Board
THE EXECUTIVE:
/s/ H. William Willoughby
---------------------------------------
H. William Willoughby
