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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 7, 1996
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CRIIMI MAE Inc.
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(Exact name of registrant as specified in its charter)
Maryland 1-10360 52-1622022
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
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(Address of principal executive office) (Zip code)
Registrant's telephone number including area code (301) 816-2300
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(Former name or former address, if changed since last report)
Exhibit Index on Page 4
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Item 5. Other Events.
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CRIIMI MAE Inc.(the "Company") has offered, pursuant to its registration
statement on Form S-3 filed with the Securities and Exchange Commission on July
13, 1994 (Commission File Number 33-54267), as amended by Post-Effective
Amendment No. 1 thereto dated February 1, 1996 (the "Registration Statement"),
and as supplemented by a Prospectus Supplement thereto dated August 7, 1996 (the
"Prospectus Supplement"), 2,100,000 shares of 10.875% Series B Cumulative
Convertible Preferred Stock, $.01 par value per share (the "Preferred Shares"),
at an offering price to the public of $25.00 per share, for an aggregate price
to public of $52,500,000. The underwriters have severally agreed to purchase
from the Company the Preferred Shares for an aggregate price of $50,400,000,
pursuant to the terms of that certain Underwriting Agreement, a copy of which is
attached hereto as Exhibit 1.1, and is incorporated in its entirety by reference
in response to this Item 5. The Company has also granted the underwriters an
option, exercisable for 30 days, to purchase up to 315,000 additional Preferred
Shares to cover over-allotments at an aggregate price of $7,560,000. The
closing of the offering is scheduled to occur on August 13, 1996.
The terms and provisions of the Preferred Shares are set forth in the
Articles Supplementary to the Articles of Incorporation of the Company, a copy
of which is attached hereto as Exhibit 4.1 and is incorporated in its entirety
by reference in response to this Item 5.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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c) Exhibits
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1.1 Form of Underwriting Agreement
4.1 Form of Articles Supplementary with respect to Preferred Shares
4.2 Form of specimen certificate representing Preferred Shares
99.1 Press Release
Page 2
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CRIIMI MAE Inc.
Date: August 9, 1996 By: /s/ H. William Willoughby
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H. William Willoughby
President
Page 3
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INDEX TO EXHIBITS
FORM 8-K
Page
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1.1 Form of Underwriting Agreement
4.1 Form of Articles Supplementary with respect to Preferred Shares
4.2 Form of specimen certificate representing Preferred Shares
99.1 Form of Press Release
Page 4
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EXECUTION COPY
EXHIBIT 1.1
2,100,000 SHARES
CRIIMI MAE INC.
SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
FORM OF UNDERWRITING AGREEMENT
AUGUST 7, 1996
Friedman, Billings, Ramsey & Co., Inc.
Potomac Tower
1001 Nineteenth Street North
Arlington, Virginia 22209
BT Securities Corporation
130 Liberty Street
31st Floor
New York, New York 10006
Dear Sirs:
CRIIMI MAE INC., a Maryland corporation (the "Company"), confirms its
agreement with you and the other underwriters named on Schedule A annexed hereto
(collectively, the "Underwriters," which term shall also include any underwriter
substituted as provided hereinafter in Section 8), for whom you are acting as
Representatives (the "Representatives") pursuant to which the Company proposes
to issue and sell 2,100,000 shares of its authorized but unissued Series B
Cumulative Convertible Preferred Stock, par value $.01 per share (the "Series B
Preferred Stock"). Said aggregate of 2,100,000 shares are herein called the
"Firm Series B Preferred Shares." In addition, the Company proposes to grant to
the Underwriters an option to purchase up to 315,000 additional shares of Series
B Preferred Stock (the "Optional Series B Preferred Shares"), as provided in
Section 1. The Firm Series B Preferred Shares and, to the extent such option is
exercised, the Optional Series B Preferred Shares, are hereinafter collectively
referred to as the "Series B Preferred Shares."
The Company hereby confirms its agreement with respect to the purchase of
the Series B Preferred Shares by the several Underwriters, as follows:
SECTION 1. Purchase, Sale and Delivery of Series B Preferred Shares. On
--------------------------------------------------------
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, (i) the Company agrees
to issue and sell to the several Underwriters
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the 2,100,000 Firm Series B Preferred Shares, and (ii) each of the Underwriters
agrees, severally and not jointly, to purchase from the Company such Firm Series
B Preferred Shares set forth next to the names of the Underwriters on Schedule A
hereto. The purchase price per share to be paid by the Underwriters to the
Company shall be $24.00 per share.
The closing of the transactions contemplated by this Agreement shall be
held at 10:00 a.m. at the offices of Friedman, Billings, Ramsey & Co., Inc. (or
such other time and place as may be agreed upon by you and the Company) on the
third (or, if the purchase set forth in the above paragraph is determined after
4:30 p.m., Washington, D.C. time, the fourth) business day following the first
date that any of the Series B Preferred Shares are released by you for sale to
the public (the "First Closing Date"); provided, however, that if the Prospectus
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(as defined below) is at any time prior to the First Closing Date recirculated
to the public, the First Closing Date shall occur upon the later of the third
full business day following the first date that any of the Series B Preferred
Shares are released by you for sale to the public and the date that is 48 hours
after the date that the Prospectus has been so recirculated.
Delivery of the Firm Series B Preferred Shares shall be made by or on
behalf of the Company to you for the respective accounts of the Underwriters
against payment by you for the accounts of the Underwriters of the purchase
price therefor by certified or official bank check or checks payable in New York
Clearinghouse (next day) funds to the order of the Company. The Firm Series B
Preferred Shares shall be delivered as instructed by you or your designated
agent and registered in such names and denominations as you shall have requested
at least two full business days prior to the First Closing Date. Confirmation
of receipt of shares will be available through the Depository Trust Company at
the Friedman, Billings, Ramsey & Co., Inc, participant account at Bear, Stearns
& Co. Inc. on the First Closing Date.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 315,000 Optional Series B
Preferred Shares at the purchase price per share to be paid for the Firm Series
B Preferred Shares, for use solely in covering any over-allotments made by you
for the accounts of the Underwriters in the sale and distribution of the Firm
Series B Preferred Shares. The option granted hereunder may be exercised at any
time (but not more than once) within 30 days after the first date that any of
the Series B Preferred Shares are released by you for sale to the public, upon
notice by you to the Company setting forth the aggregate number of Optional
Series B Preferred Shares as to which the Underwriters are exercising the
option, the names and denominations in which such shares are to be registered
and the time at which such shares will be delivered. The Company agrees to sell
to the Underwriters the number of Optional Series B Preferred Shares specified
in such notice and the Underwriters agree, severally and not jointly, to
purchase such Optional Series B Preferred Shares. No Optional Series B
Preferred Shares shall be sold or delivered unless all of the Firm Series B
Preferred Shares have been, or simultaneously are, sold and delivered. Such
time of delivery (which may not be earlier than the First Closing Date), being
herein referred to as the "Second Closing Date," shall be determined by you, but
if at any time other than the First Closing Date shall not be earlier
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than two nor later than five full business days after delivery of such notice of
exercise. The number of Optional Series B Preferred Shares to be purchased by
each Underwriter shall be determined by multiplying the number of Optional
Series B Preferred Shares to be sold by the Company pursuant to such notice of
exercise by a fraction, the numerator of which is the number of Firm Series B
Preferred Shares to be purchased by such Underwriter as set forth opposite its
name on Schedule A and the denominator of which is 2,100,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). The Optional Series B Preferred Shares shall be delivered
as instructed by you or your designated agent no later than the business day
preceding the Second Closing Date in such names and denominations as you shall
have requested. Confirmation of receipt of shares will be available through the
Depository Trust Company at the Friedman, Billings, Ramsey & Co., Inc.
participant account at Bear Stearns & Co. Inc. on the Second Closing Date. The
manner of payment for and delivery of the Optional Series B Preferred Shares at
the offices of Friedman, Billings, Ramsey & Co., Inc. (or such other place as
may be agreed upon by you and the Company) shall be the same as for the Firm
Series B Preferred Shares purchased from the Company as specified in the
preceding paragraph. At any time before lapse of the option, you may cancel
such option by giving written notice of such cancellation to the Company.
You have advised the Company that each Underwriter has authorized you to
accept delivery of its Series B Preferred Shares and to make payment and receipt
therefor. You, individually and not as the Representatives of the Underwriters,
may (but shall not be obligated to) make payment for any Series B Preferred
Shares to be purchased by any Underwriter whose funds shall not have been
received by you by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall not
relieve such Underwriter from any of its obligations under this Agreement.
Subject to the terms and conditions hereof, upon your authorization of the
release of the Firm Series B Preferred Shares, the several Underwriters agree to
make a public offering (the "Offering") of their respective portions of the Firm
Series B Preferred Shares on the terms set forth in the Prospectus.
SECTION 2. Representations and Warranties of the Company. The Company
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represents and warrants to the Underwriters that:
(a) A shelf registration statement on Form S-3 (File No. 33-54267)
with respect to up to $200,000,000 of securities, including the Series B
Preferred Shares, as amended by Post-Effective Amendment No. 1, has been
prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the rules
and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, has been filed with the
Commission and has become effective. The conditions for the use of a
registration statement on Form S-3 set forth in the General Instructions on
Form S-3 have been satisfied and the Company is entitled to use such form
for the transactions contemplated
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herein. Copies of such registration statement have been delivered by the
Company to you.
As used in this Agreement, "Effective Date" means the date and the
time as of which such registration statement, or the most recent post-
effective amendment thereto, if any, was declared effective by the
Commission; "Base Prospectus" means the prospectus included in such
registration statement, when it became effective under the Securities Act
on February 1, 1996, as it may have been amended or supplemented subsequent
to that date to the date hereof; "Prospectus Supplement" means each
prospectus supplement accompanying the Base Prospectus in connection with
the offer and sale of the Series B Preferred Shares by the Company, as it
may have been amended or supplemented to the date hereof; the Base
Prospectus and Prospectus Supplement include any prospectus filed with the
Commission with the consent of the Underwriters pursuant to Rule 424(b) of
the Rules and Regulations; "Registration Statement" means such registration
statement, as amended at the Effective Date, including any documents
incorporated by reference therein at such time and all information
contained in the Prospectus (as defined below) filed with the Commission
pursuant to Rule 424(b)(2) of the Rules and Regulations; and "Prospectus"
means the Base Prospectus and final Prospectus Supplement, as first filed
with the Commission pursuant to Rule 424(b)(2) of the Rules and
Regulations. The Prospectus will be filed pursuant to Rule 424(b)(2) of
the Rules and Regulations on or before the second business day after the
date hereof (or such earlier time as may be required by the Rules and
Regulations). Reference made herein to any Prospectus Supplement or the
Prospectus shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act, as of the date of such Prospectus Supplement or the
Prospectus, as the case may be; and any reference to any amendment or
supplement to any Prospectus Supplement or the Prospectus shall be deemed
to refer to and include any document filed under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), after the date of such
Prospectus Supplement or the Prospectus, as the case may be, and
incorporated by reference in such Prospectus Supplement or the Prospectus,
as the case may be; and any reference to any amendment to the Registration
Statement shall be deemed to include any report or document filed by or on
behalf of the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the Effective Date that is
incorporated by reference in the Registration Statement. No stop order
suspending the effectiveness of the Registration Statement has been issued,
and no proceeding for that purpose has been instituted or threatened by the
Commission.
(b) Each part of the Registration Statement, when such part became
effective, did not contain, and each such part, as amended or supplemented,
if applicable, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; the Registration Statement and
the Prospectus comply, and, as amended or supplemented, if applicable, will
comply at the First Closing Date and the Second Closing Date, as the case
may be, in all material respects with the requirements of the Securities
Act and the
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Rules and Regulations; the Prospectus does not and, as amended or
supplemented, if applicable, will not at the First Closing Date and the
Second Closing Date, as the case may be, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading; the documents
incorporated or deemed to be incorporated by reference in the Prospectus,
at the time they were or hereafter are filed with the Commission, complied
or will comply when so filed in all material respects with the requirements
of the Exchange Act and the rules and regulations under the Exchange Act;
provided that the foregoing shall not apply to statements in or omissions
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from any such document in reliance upon, and in conformity with, written
information furnished to the Company by you, or by any Underwriter through
you, specifically for use in the preparation thereof. The Company
acknowledges that the information set forth on the cover page of the
Prospectus Supplement with respect to the price and terms of the Offering
and the statements set forth under the heading "Underwriting" in the
Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Underwriters specifically for
inclusion in the Registration Statement.
(c) Except as set forth on Schedule 2(c), the Company does not own or
control, directly or indirectly, any corporation, association or other
entity. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland, with
full corporate power and authority to own and lease its properties and
conduct its business as described in the Prospectus; the Company is in
possession of and operating in compliance in all material respects with all
authorizations, licenses, permits, consents, certificates and orders
material to the conduct of its business, all of which are valid and in full
force and effect, and the Company has not received any notice relating to
the revocation or modification of such authorizations, licenses, permits,
consents, certificates and orders; the Company is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which the ownership or leasing of properties or the conduct
of its business requires such qualification, except for jurisdictions in
which the failure to so qualify would not have a material adverse effect
upon the Company; and the Company has not received notice of any proceeding
in any such jurisdiction revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
(d) The Company has, and upon consummation of the Offering will have,
an authorized capitalization as set forth under the heading "Description of
Series B Preferred Shares" in the Prospectus Supplement. All of the issued
and outstanding shares of capital stock of the Company have been duly and
validly issued and are fully paid and nonassessable. Except as described
in the Prospectus, no capital stock of the Company is issued and
outstanding and no stockholder of the Company or other person has any
right, option or warrant to acquire any capital stock of the Company.
Except as disclosed in or contemplated by the Prospectus and the financial
statements of the Company and the related notes thereto incorporated by
reference in the Prospectus, the
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Company does not have outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contract or commitments
to issue or sell shares of its capital stock or any such options, rights,
convertible securities or obligations. The description of the Company's
stock option, stock bonus and other stock plans or arrangements, and the
options or other rights to be granted and exercised thereunder, set forth
in the Prospectus or as incorporated therein by reference, accurately and
fairly presents the information required to be shown with respect to such
plans, arrangements, options and rights.
(e) The Series B Preferred Shares to be sold by the Company hereunder
have been duly authorized and, when issued, delivered and paid for in the
manner set forth in this Agreement, will be validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the sale of the Series B Preferred Shares by
the Company pursuant to this Agreement. The certificates used to evidence
shares of Series B Preferred Stock are in due and proper form.
(f) The Company is organized in conformity with the requirements for
qualification as a real estate investment trust ("REIT") under the Internal
Revenue Code of 1986, as amended (the "Code"), and its method of operation
enables it to meet the requirements for taxation as a REIT under the Code.
The Company will elect to be taxed as a REIT under the Code for the year
ended December 31, 1996.
(g) No approval, consent or authority of the stockholders of the
Company or the Board of Directors of the Company or any governmental agency
or any other third party will be required for the issuance and sale of the
Series B Preferred Shares to be sold by the Company as contemplated herein
or for execution of this Agreement except such as have been obtained.
(h) The Company has full legal right, power and authority to enter
into this Agreement and to perform the transactions contemplated hereby.
This Agreement has been duly and validly authorized by the Company and upon
due execution and delivery by the Representatives constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to limitations imposed by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity) and subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws, now or hereafter in effect, relating to or limiting
creditors' rights generally. The making and performance of this Agreement
by the Company and the consummation of the transactions herein contemplated
will not violate any provisions of the articles of incorporation or bylaws,
or other organizational documents of the Company and will not conflict
with, result in the breach or violation of, or constitute, either by itself
or upon notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the
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Company is a party or by which the Company or any of its properties may be
bound or affected, any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the Company
or any of its properties, except where any violation, conflict, breach or
default, whether individually or in the aggregate would not have a material
adverse effect on the condition (financial or otherwise), business,
properties, results of operations, management or prospects of the Company
(hereinafter a "Material Adverse Effect"). No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and
delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except for compliance with the Securities
Act, the Exchange Act, the Blue Sky laws applicable to the public offering
of the Series B Preferred Shares by the Underwriters and the clearance of
such offering with the National Association of Securities Dealers, Inc.
(the "NASD").
(i) Arthur Andersen LLP, which has expressed its opinion with respect
to the 1994 and 1995 Annual Reports on Form 10-K of the Company filed with
the Commission and which has performed certain agreed upon procedures as
detailed in its letter dated August 7, 1996 with respect to the June 30,
1996 interim financial statements filed or to be filed on Form 10-Q with
the Commission as a part of the Registration Statement and included or
incorporated by reference in the Prospectus and in the Registration
Statement, is an independent accountant as required by the Securities Act
and the Rules and Regulations.
(j) The financial statements and schedules of the Company, and the
related notes thereto, included or incorporated by reference in the
Registration Statement and the Prospectus, present fairly the financial
position of the Company as of the respective dates of such financial
statements and schedules, and the consolidated results of operations and
changes in financial position of the Company for the respective periods
covered thereby. Such statements, schedules and related notes have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis as certified by the independent accountant
named in subsection 2(i). No other financial statements or schedules are
required to be included in the Registration Statement or the Prospectus.
The other financial, statistical and pro forma information and related
notes included in the Registration Statement and the Prospectus (i) present
fairly the information shown therein on a basis consistent (except as
otherwise noted therein) with the audited financial statements of the
Company included therein; and (ii) are in compliance in all material
respects with the requirements of the Securities Act and the Rules and
Regulations.
(k) The Company is not in violation or default of any provision of its
articles of incorporation, bylaws, or other organizational documents,
except as to defaults which individually or in the aggregate would not have
a Material Adverse Effect.
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(l) There are no contracts or other documents required to be described
in the Registration Statement or the Prospectus or to be filed as exhibits
by the Securities Act or by the Rules and Regulations which have not been
described or filed as required. The contracts so described in the
Prospectus are in full force and effect on the date hereof, the
descriptions thereof or references thereto are correct in all material
respects; and except as to defaults that individually or in the aggregate
would not be material to the Company, neither the Company nor, to the
knowledge of the Company, any other party is in breach of or default under
any of such contracts.
(m) There are no legal or governmental actions, suits or proceedings
pending or, to the knowledge of the Company, threatened to which the
Company is or may be a party or of which property owned or leased by the
Company is or may be the subject, which actions, suits, or proceedings
might, individually or in the aggregate, prevent or adversely affect the
transactions contemplated by this Agreement or are likely to result in a
Material Adverse Effect, and no labor disturbance by the employees of the
Company exists or, to the knowledge of the Company, is imminent which might
be expected to affect adversely the Company's condition (financial or
otherwise), properties, business, results of operations or prospects. No
enforcement proceeding, whether formal or informal, has been commenced
against the Company by any governmental authority, nor to the knowledge of
the Company, have any such proceedings been instituted, threatened or
recommended. Neither the Company nor any of its officers, employees or
directors is a party or subject to the provisions of any regulatory action,
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body affecting the business of
the Company.
(n) The Company has good and marketable title to all its properties
and assets free and clear of all liens, charges, encumbrances or
restrictions, except such as do not materially adversely affect the value
of such properties and assets and do not interfere with the use made or
proposed to be made of such properties and assets by the Company; all of
the leases and subleases material to the business of the Company or under
which the Company holds properties described in the Prospectus are in full
force and effect; and the Company has no notice of any material claim of
any sort which has been asserted by anyone adverse to the rights of the
Company as owner or as lessee or sublessee under any of the leases or
subleases mentioned above, or materially affecting or questioning the
rights of the Company to the continued possession of the leased or
subleased premises under any such lease or sublease. Except as disclosed
in the Prospectus and other than such leases and properties as are
immaterial in the aggregate, the Company owns or leases all such properties
as are necessary to its operations as now conducted or as proposed to be
conducted.
(o) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, taking into account the information
contained in documents incorporated therein by reference and, except as may
otherwise be disclosed in the Registration Statement or the Prospectus:
(i) the Company has not incurred any
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material liabilities or obligations, direct, indirect or contingent, or
entered into any material oral or written agreement or other transaction
whether or not arising in the ordinary course of business, which could
result in a material reduction in the future earnings of the Company; (ii)
there has not been any material change in the short-term debt or long-term
debt of the Company or an increase in the aggregate dollar or principal
amount of the Company's assets which are classified by the Company as
substandard, doubtful or loss which are 90 days or more past due; (iii)
there has not been any material adverse change in the aggregate dollar
amount of the Company's net worth; (iv) there has been no material adverse
change in the Company's relationship with its insurance carriers,
including, without limitation, cancellation or other termination of any of
the Company's insurance coverage; (v) there has been no material change in
management of the Company; (vi) the Company has not sustained any material
loss or interference with its business or properties from fire, flood,
windstorm, earthquake, accident or other calamity, whether or not covered
by insurance; (vii) the Company has not paid or declared any dividends or
other distributions with respect to its capital stock, and the Company is
not in default in the payment of principal or interest on any outstanding
debt obligations; (viii) there has not been any change in the capital stock
(other than upon the sale of the Series B Preferred Shares hereunder); and
(ix) there has not been any material adverse change in the condition
(financial or otherwise), business, properties, results of operations or
prospects of the Company.
(p) The Company has sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals and governmental authorizations to conduct
its business as now conducted; the expiration of any trademarks, trade name
rights, patent rights, copyrights, licenses, approvals or governmental
authorizations would not have a Material Adverse Effect, and the Company
has no knowledge of any material infringement by it of trademark, trade
name rights, patent rights, copyrights, licenses, trade secret or other
similar rights of others, and to the Company's knowledge, there is no claim
being made against the Company regarding trademark, trade name, patent,
copyright, license, trade secret or other infringement which could have a
Material Adverse Effect.
(q) The Company has complied with all laws, regulations and orders
applicable to its businesses and properties, except where the failure to so
comply, individually or in the aggregate, would not have a Material Adverse
Effect; the Company is not in default under any indenture, mortgage, deed
of trust, voting trust agreement, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or other
agreement or instrument to which it is a party or by which it or any of its
properties are bound, and there does not exist any state of facts which
constitutes an event of default on the part of the Company as any such
event is defined in such documents or which, with notice or lapse of time
or both, would constitute such an event of default, the violation or
default of which would individually or in the aggregate have a Material
Adverse Effect on the Company; the Company has all governmental licenses,
permits, consents, orders, approvals and other authorizations necessary to
carry on its business as contemplated in the Prospectus, except for those,
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the absence of which, individually or in the aggregate, would not have a
Material Adverse Effect, and it has not received any written notice of
proceedings relating to the revocation or modification of any such
governmental license, permit, consent, order, approval or other
authorization which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely
affect the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company.
(r) The Company has not been advised, and has no reason to believe,
that the Company is not conducting business in material compliance with all
applicable laws, rules and regulations.
(s) The Company has filed or caused to be filed all necessary and
material federal, state and foreign income and franchise tax returns and
has paid all taxes shown as due thereon; and the Company has no knowledge
of any tax deficiency which has been asserted or threatened in writing
against the Company which could have a Material Adverse Effect.
(t) The Company is not required to register as an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(u) The Company has not distributed and will not distribute prior to
the later to occur of (i) First Closing Date and (ii) completion of the
distribution of Series B Preferred Shares, any offering material in
connection with the offering and sale of the Series B Preferred Shares
other than the Registration Statement, the Prospectus, or other materials
permitted by the Securities Act.
(v) The Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to,
insurance covering real and personal property owned or leased by the
Company against theft, forgery, damage, destruction, acts of vandalism and
all other risks customarily insured against, all of which insurance is in
full force and effect.
(w) The Company has not at any time during the last five years (i)
made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made
any payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
(x) All material transactions between the Company and the officers and
directors of the Company and their affiliates have been accurately
disclosed in the Registration Statement and Prospectus and the documents
incorporated therein by reference; and the terms of such transactions are
fair to the Company.
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(y) Except as disclosed in the Registration Statement and Prospectus
and the documents incorporated therein by reference, the Company has not:
(i) placed any securities within the last 18 months; (ii) had any material
dealings with any member of the NASD or any person related to or associated
with such member, other than discussions and meetings relating to the
proposed Offering, routine purchases and sales of U.S. Government and
agency securities and other assets, and other discussions concerning
transactions in mortgage backed securities and related instruments and
other commercial mortgage activities; (iii) entered into a financial or
management consulting agreement except for the engagement letter with
Friedman, Billings, Ramsey & Co., Inc. dated June 5, 1996 and other
arrangements or agreements concerning transactions in mortgage backed
securities and related instruments and other commercial mortgage
activities; or (iv) engaged any intermediary between the Representatives
and the Company in connection with the Offering, and no person is being
compensated in any manner for such service.
(z) The Company has not taken and will not take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in the stabilization or manipulation of the price of
the Series B Preferred Stock to facilitate the sale or resale of the Series
B Preferred Stock.
(aa) None of the assets of the Company, nor will such assets, as of
the Closing Date, constitute, "plan assets" under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
(bb) The Series B Preferred Shares have been duly authorized for
listing by the New York Stock Exchange upon official notice of issuance.
(cc) The Company has not relied upon the Representatives or legal
counsel for the Representatives for any legal, tax or accounting advice in
connection with the Offering.
Any certificate signed by any officer of the Company and delivered to you
or to your counsel shall be deemed a representation and warranty by the Company
to you as to the matters covered thereby. Any certificate delivered by the
Company to its counsel for purposes of enabling such counsel to render the
opinions referred to in Section 6(d) will also be furnished to the Underwriters
and their counsel and shall be deemed to be additional representations and
warranties by the Company (as appropriate) to the Underwriters as to the matters
covered thereby, and the Underwriters and their counsel are entitled to rely
thereon.
SECTION 3. Representations and Warranties of the Underwriters. You, on
--------------------------------------------------
behalf of the Underwriters, represent and warrant to the Company that the
information set forth: (i) on the cover page of the Prospectus Supplement with
respect to price and terms of the Offering, and (ii) under the caption
"Underwriting" in the Prospectus Supplement was furnished to the Company by and
on behalf of the Underwriters for use in connection with the preparation of the
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Prospectus Supplement and is complete and correct in all material respects. You
represent and warrant that you have been authorized by each of the several
Underwriters as their Representatives to enter into this Agreement on their
behalf and to act for them in the manner herein provided.
SECTION 4. Covenants of the Company. The Company covenants and agrees that:
------------------------
(a) The Company will cause the Prospectus to be filed as required by
Section 2(a) (but only if you have not reasonably objected thereto by
notice to the Company after having been furnished a copy a reasonable time
prior to filing) and will notify you promptly of such filing; within the
time during which a Prospectus is required to be delivered under the Act,
it will notify you promptly of the time when any subsequent amendment to
the Registration Statement has become effective or any supplement to the
Prospectus has been filed and of any request by the Commission for any
amendment or supplement to the Registration Statement or Prospectus or for
additional information; it will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or Prospectus that, in your opinion, may be
necessary or advisable in connection with the distribution of the Series B
Preferred Shares by the Underwriters; and it will file no amendment or
supplement to the Registration Statement or Prospectus to which you shall
reasonably object by notice to the Company after having been furnished a
copy a reasonable time prior to the filing.
(b) Within the time during which a Prospectus is required to be
delivered under the Act, the Company will advise you, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification of the
Series B Preferred Shares for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceeding for any such purpose; and
it will promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such a stop order should be issued.
(c) Within the time during which a Prospectus is required to be
delivered under the Act, the Company will comply with all requirements
imposed upon it by the Securities Act and by the Rules and Regulations, as
from time to time in force, so far as necessary to permit the continuance
of sales of or dealings in the Series B Preferred Shares as contemplated by
the provisions hereof and the Prospectus. If during such period any event
occurs as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statement or Prospectus
to comply with the Act, the Company will promptly notify you and will amend
or supplement the Registration Statement or Prospectus (at the expense of
the Company) so as to correct such statement or omission or effect such
compliance.
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<PAGE>
(d) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion
of counsel for the Underwriters a prospectus is required by the Securities
Act to be delivered in connection with sales by any Underwriter or dealer,
the Company will expeditiously deliver to each Underwriter and each dealer,
without charge, as many copies of the Prospectus (and of any amendment or
supplement thereto) as you may reasonably request. The Company consents to
the use of the Prospectus (and of any amendment or supplement thereto) in
accordance with the provisions of the Securities Act and with the
securities or Blue Sky laws of the jurisdictions in which the Series B
Preferred Shares are offered by the Underwriters and by all dealers to whom
Series B Preferred Shares may be sold, both in connection with the offering
and sale of the Series B Preferred Shares and for such period of time
thereafter as the Prospectus is required by the Securities Act to be
delivered in connection with sales by any Underwriter or dealer. If during
such period of time any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriters is required to be
set forth in the Prospectus (as then amended or supplemented) or should be
set forth therein in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with the
Securities Act or any other law, the Company will forthwith prepare and,
subject to the provisions of Section 4(a), file with the Commission an
appropriate supplement or amendment thereto, and will expeditiously furnish
to the Underwriters and dealers a reasonable number of copies thereof. In
the event that the Company and you agree that the Prospectus should be
amended or supplemented, the Company, if requested by you, will promptly
issue a press release announcing or disclosing the matters to be covered by
the proposed amendment or supplement.
(e) The Company will make generally available to its securities
holders as soon as practicable, but not later than 45 days after the close
of the period covered thereby, an earnings statement (in a form complying
with the provisions of Section 11(a) of the Securities Act and Rule 158 of
the Rules and Regulations) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next following the
"effective date" (as defined in said Rule 158) of the Registration
Statement and will advise you in writing when such statement has been so
made available.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Series B Preferred Shares for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such jurisdictions
as you designate, will comply with such laws and will continue such
qualifications, registrations and exemptions in effect so long as
reasonably required for the distribution of the Series B Preferred Shares.
The Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where
it is not currently qualified or where it would be subject to taxation as a
foreign corporation.
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<PAGE>
(g) The Company, during the period when the Prospectus is required to
be delivered under the Securities Act, will file all documents required to
be filed with the Commission pursuant to Section 13, 14, or 15 of the
Exchange Act within the time periods required by the Exchange Act and the
rules and regulations under the Exchange Act.
(h) During the period of three years hereafter, the Company will
furnish to you: (i) at the same time as such are furnished to its
stockholders generally, copies of the Annual Report of the Company
containing the consolidated balance sheet of the Company as of the close of
such fiscal year and consolidated statements of income, stockholders'
equity and cash flows for the year then ended and the opinion thereon of
the Company's independent public accountant; (ii) as soon as practicable
after the filing thereof, copies of each proxy statement, Annual Report on
Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or
other report filed by the Company with the Commission, the NASD or any
securities exchange; (iii) as soon as available, copies of any report or
communication of the Company mailed generally to holders of its common
stock or preferred stock (including the Series B Preferred Stock); (iv) as
soon as practicable after the filing thereof, of each non-confidential
report or other statement or document filed by the Company with the
Commission, or with any national securities exchange or quotation system on
which any securities of the Company may be listed or quoted; and (v) from
time to time, such other non-confidential information concerning the
Company as the Underwriters, or any of them, may reasonably request.
(i) Except as specifically permitted by the Prospectus, during the
period of 180 days after the first date that any of the Series B Preferred
Shares are released by you for sale to the public, without your prior
written consent (which consent may be withheld at your sole discretion),
the Company will not issue, offer, sell, grant options to purchase or
otherwise dispose of any of the Company's preferred equity securities
(except for the Series A Preferred Stock) or any other securities
convertible into or exchangeable for its Series B Preferred Stock or other
preferred equity security (except for the Series A Preferred Stock).
(j) The Company will apply the net proceeds from the offering and sale
of the Series B Preferred Shares in the manner set forth in the Prospectus
Supplement under "Use of Proceeds."
(k) The Company will use its best efforts (i) to cause the New York
Stock Exchange to list the Series B Preferred Shares upon issuance thereof
and (ii) to maintain such listing.
(l) The Company will not distribute prior to the later to occur of (i)
the First Closing Date and (ii) completion of the distribution of Series B
Preferred Shares, any offering material in connection with the offering and
sale of the Series B Preferred
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<PAGE>
Shares other than the Registration Statement, the Prospectus, and other
materials permitted by the Securities Act.
(m) The Company will not, directly or indirectly, take any action
designed, or which might be expected, to cause or result in, or which will
constitute, stabilization or manipulation of the price of the Series B
Preferred Stock to facilitate the sale or resale of the Series B Preferred
Shares.
(n) The Company will continue to elect to qualify as a "real estate
investment trust" under the Code for the years ended December 31, 1996 and
December 31, 1997, and will use its best efforts to continue to meet the
requirements to qualify as a "real estate investment trust" for the years
ended December 31, 1996 and December 31, 1997. The Company has no present
intention not to elect to qualify as a "real estate investment trust" under
the Code for the years after 1997.
(o) The Company will not rely upon the Representatives or legal
counsel for the Representatives for any legal, tax or accounting advice in
connection with the Offering.
SECTION 5. Expenses. Whether or not the transactions contemplated
--------
hereunder are consummated or this Agreement is terminated, the Company agrees to
pay all costs, fees and expenses incurred in connection with the performance of
its obligations hereunder and in connection with the transactions contemplated
hereby, including without limiting the generality of the foregoing: (i) all
expenses incident to the issuance and delivery of the Series B Preferred Shares
(including all printing and engraving costs), (ii) all fees and expenses of the
registrar and transfer agent of the Series B Preferred Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Series B Preferred Shares to the Underwriters, (iv) all
reasonable fees and expenses of the Company's counsel and the Company's
independent accountant, (v) all costs and expenses incurred in connection with
the preparation, printing, filing, shipping and distribution of the Registration
Statement, each Prospectus and Prospectus Supplement (including all exhibits and
financial statements) and all amendments and supplements provided for herein,
(vi) all fees and expenses incurred by the Company or the Underwriters in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Series B Preferred
Shares for offer and sale under the Blue Sky laws, (vii) the filing fee of the
NASD, (viii) all fees and expenses incurred in connection with the listing of
the Series B Preferred Stock on the New York Stock Exchange, and (ix) the
reasonable, out-of-pocket expenses of the Representatives incurred in connection
with the performance of its activities under this Agreement, including but not
limited to costs such as printing, facsimile, courier service, direct computer
expenses, fifty percent of the "road show" expenses (including but not limited
to travel and accommodations), and the fees of the Representatives, outside
counsel, consultants, and accountants, all of which in the aggregate shall not
exceed $____________. If the sale of the Series B Preferred Stock provided
herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 6 is not satisfied, because this Agreement is
terminated pursuant to Section 9,
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<PAGE>
because of any failure, refusal or inability on the part of the Company to
perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder other than by reason of a default of any of the
Underwriters, the Company will reimburse the Underwriters upon demand for all
reasonable out-of-pocket expenses (including attorneys' fees and disbursements)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Series B Preferred Stock. The Company shall not in any event be
liable to any of the Underwriters for the loss of anticipated profits from the
transactions covered by this Agreement.
SECTION 6. Conditions to the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase and pay for the Firm Series B
Preferred Shares on the First Closing Date and the Optional Series B Preferred
Shares on the Second Closing Date shall be subject to the accuracy in all
material respects of the representations and warranties on the part of the
Company herein set forth as of the date hereof and as of the First Closing Date
or the Second Closing Date, as the case may be, to the accuracy in all material
respects of the statements of Company officers made pursuant to the provisions
hereof, to the performance in all material respects by the Company of its
obligations hereunder and to the following additional conditions:
(a) All filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to the knowledge
of the Company or any Underwriter, threatened by the Commission; no order
suspending the effectiveness of the Registration Statement or the
qualification or registration of the Series B Preferred Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending before or threatened or
contemplated by the authorities of any jurisdiction; and any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to
your satisfaction.
(b) No Underwriter shall have advised the Company that the
Registration Statement or Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact that in your opinion is
material, or omits to state a fact that in your opinion is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i)
there shall not have been any change in the capital stock of the Company or
any material change in the short-term debt or long-term debt (other than in
the ordinary course of business) of the Company, (ii) except as set forth
or contemplated by the Registration Statement or the Prospectus, no
material oral or written agreement or other transaction shall have been
entered into by the Company, which is not in the ordinary course of
business and which could result in a material reduction in the future
earnings of the Company, (iii) no loss
16
<PAGE>
or damage (whether or not insured) to the property or assets of the Company
shall have been sustained which materially and adversely affects the
condition (financial or otherwise), business, results of operations or
prospects of the Company, (iv) no legal or governmental action, suit or
proceeding affecting the Company which is material to the Company or which
affects or may affect the transactions contemplated by this Agreement shall
have been instituted or threatened, (v) no enforcement proceeding, whether
formal or informal, shall have been commenced against the Company by any
governmental agency nor shall any such proceeding have been instituted,
threatened or recommended, and (vi) there shall not have been any material
change in the condition (financial or otherwise), business, management,
results of operations or prospects of the Company which makes it
impractical or inadvisable in the judgment of the Underwriters to proceed
with the public offering or purchase of the Series B Preferred Shares as
contemplated hereby.
(d) There shall have been furnished to you as Representatives of the
Underwriters, in form and substance satisfactory to you, except as
otherwise expressly provided below:
(i) An opinion of Swidler & Berlin Chartered, Washington, D.C.,
counsel for the Company, addressed to the Underwriters and dated the
First Closing Date, or the Second Closing Date, as the case may be, in
the form of Exhibit A to this Agreement.
(ii) Such opinion or opinions of Akin, Gump, Strauss, Hauer &
Feld, L.L.P., counsel for the Underwriters, dated the First Closing
Date or the Second Closing Date, as the case may be, with respect to
the valid existence of the Company, the sufficiency of corporate
proceedings authorizing this Agreement, the validity of the Series B
Preferred Shares, the form of the Registration Statement and
Prospectus, and the Company shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as
they may reasonably request for the purpose of enabling them to pass
upon such matters. In connection with such opinions, such counsel may
rely on representations or certificates of officers of the Company and
governmental officials.
(iii) A certificate of the Company executed by the Chairman of
the Board or President and the Chief Financial or Accounting Officer,
dated the First Closing Date or the Second Closing Date, as the case
may be, to the effect that:
(1) Since the date as of which information is given or
incorporated by reference in the Registration Statement and the
Prospectus, there has not been any material adverse change in the
condition (financial or otherwise), earnings, business, affairs,
properties,
17
<PAGE>
prospects or results of operations of the Company whether or not
arising in the ordinary course of business;
(2) The representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct in all
material respects as of the date of this Agreement and as of the
First Closing Date or the Second Closing Date, as the case may
be, and the Company has complied in all material respects with
all the agreements and satisfied all the conditions on its part
to be performed or satisfied on or prior to such Closing Date;
(3) The Commission has not issued any order preventing or
suspending the use of the Prospectus filed as a part of the
Registration Statement or any amendment or supplement thereto; no
stop order suspending the effectiveness of the Registration
Statement has been issued; and to the best knowledge of the
Company, no proceedings for that purpose have been instituted or
are pending or contemplated under the Securities Act;
(4) To the best of such Officers' knowledge, neither the
Registration Statement nor the Prospectus nor any amendment or
supplement thereto nor any agreement incorporated therein by
reference includes any untrue statement of a material fact or
omits to state any material fact required to be stated therein,
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(5) Since the initial date on which the Registration
Statement was filed with the Commission, no agreement, written or
oral, transaction or event has occurred which should have been
set forth in an amendment to the Registration Statement or in a
supplement to or amendment of any prospectus which has not been
disclosed in such a supplement or amendment (or document
incorporated therein by reference);
(6) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and except
as disclosed in or contemplated by the Prospectus, the Company
has not sustained a material loss or damage by strike, fire,
flood, windstorm, accident or other calamity (whether or not
insured).
(iv) A letter addressed to the Underwriters, from Arthur Anderson
LLP, independent accountants, in form and substance reasonably
satisfactory to you, the first one to be dated the day of this
Agreement, the second one to be
18
<PAGE>
dated the First Closing Date and the third one (in the event of a
Second Closing) to be dated the Second Closing Date.
(v) On or before the First Closing Date, letters from each
director and executive officer of the Company, in form and substance
satisfactory to you, confirming that for a period of one hundred
eighty (180) days after the first date that any of the Series B
Preferred Shares are released by you for sale to the public, such
person will not directly or indirectly sell, offer to sell, contract
to sell or otherwise dispose of any shares of Series B Preferred Stock
or any right to acquire such shares without the prior written consent
of the Representatives, which consent may be withheld at the sole
discretion of the Representatives.
(vi) On the second day after the date of this Agreement, evidence
of the filing with the Maryland State Department of Assessments and
Taxation of Articles Supplementary to the Articles of Incorporation of
the Company relating to the Series B Preferred Stock substantially in
the form attached hereto as Exhibit B.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the
Underwriters. The Company shall furnish you with such manually signed or
conformed copies of such opinions, certificates, letters and documents as you
may reasonably request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon written notification by you as Representatives
to the Company without liability on the part of any Underwriter or the Company,
except for the expenses to be paid or reimbursed by the Company pursuant to
Section 5 and except to the extent provided in Section 7.
SECTION 7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls an Underwriter, as the case may be,
within the meaning of the Securities Act against any losses, claims,
damages, liabilities or expenses, joint or several, to which an Underwriter
or such controlling person may become subject, under the Securities Act,
the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of the Company),
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, any Prospectus
Supplement, or any amendment or supplement thereto or any
19
<PAGE>
document incorporated therein by reference, or based upon written
information supplied by the Company and filed in any state or jurisdiction
to register or qualify any or all of the Series B Preferred Shares or to
claim an exemption therefrom, or provided to any state or jurisdiction to
exempt the Company as a broker-dealer or its officers, directors and
employees as broker-dealers or agents, under the securities laws, thereof
(collectively, the "Blue Sky Application") or arise out of or are based
upon the omission or alleged omission to state in any of them a material
fact required to be stated therein or necessary to make the statements in
any of them not misleading or arise from any theory of liability whatsoever
relating to or arising from or based upon the Registration Statement, the
Prospectus, any Prospectus Supplement, or any amendment or supplement
thereto, or arise out of or are based in whole or in part on any inaccuracy
in the representations and warranties of the Company contained herein or
any failure of the Company to perform its obligations hereunder or under
law; and will reimburse each Underwriter and each such controlling person
for any legal and other expenses as such expenses are reasonably incurred
by such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
-------- -------
Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon,
an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, the Prospectus, any Prospectus
Supplement or any amendment or supplement thereto in reliance upon and in
conformity with the information furnished to the Company pursuant to
Section 3 hereof; provided, further, that the foregoing indemnity with
-------- -------
respect to the Prospectus or any Prospectus Supplement shall not inure to
the benefit of any Underwriter from whom the person asserting any such
loss, claim, damage or liability purchased the Series B Preferred Shares
that are the subject thereof if such person did not receive a copy of the
Prospectus or Prospectus Supplement at, or prior to, the confirmation of
the sale to such person in any case where such delivery is required by the
Securities Act, and the untrue statement or omission of a material fact
contained in such prospectus or prospectus supplement was corrected in the
document the Underwriter did not deliver. In addition to its other
obligations under this Section 7(a), the Company agrees that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, or any inaccuracy in the representations
and warranties of the Company herein or failure to perform its obligations
hereunder or under law, all as described in this Section 7(a), it will
reimburse each Underwriter (and, to the extent applicable, each controlling
person) on a quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding notwithstanding the
absence of a judicial determination as to the propriety and enforceability
of the Company's obligation to reimburse each Underwriter (and, to the
extent applicable, each controlling person) for such expenses, and the
possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, upon notice in
writing to that
20
<PAGE>
effect from the Company, accompanied by the court order, such Underwriter
(and, to the extent applicable, each controlling person) shall promptly
return
it to the Company, together with interest, compounded daily, determined on
the basis of the prime rate (or other commercial lending rate for borrowers
of the highest credit standing) announced from time to time by First Union
Bank, Washington, D.C. (the "Prime Rate"). Any such interim reimbursement
payments which are not made to an Underwriter within 30 days after a
request for reimbursement, shall bear interest at the Prime Rate from the
date of such requests. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) You or each Underwriter, as the case may be, will severally
indemnify and hold harmless, in proportion to your and their, as the case
may be, commitments hereunder, each of the Company, its directors, its
officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of the Securities Act, against
any losses, claims, damages, liabilities or expenses to which the Company
or any such director, officer, or controlling person, may become subject,
under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of such Underwriter), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading, in each such case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with
the information furnished to the Company pursuant to Section 3 hereof, and
will severally reimburse the Company or any such director, officer or
controlling person for any legal and other expense reasonably incurred by
the Company, or any such director, officer, or controlling person in
connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action. In addition to
the other obligations under this Section 7(b), you or each Underwriter, as
the case may be, severally agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged
statement or omission, described in this Section 7(b) which relates to
information furnished to the Company pursuant to Section 3 hereof, it will
reimburse the Company (and, to the extent applicable, each officer,
director, or controlling person) on a quarterly basis for all reasonable
legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of your or the
21
<PAGE>
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, or controlling person) for such
expenses, and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that
any such interim reimbursement payment is so held to have been improper,
upon notice in writing to that effect from the Company, accompanied by the
court order, the Company (and, to the extent applicable, each officer,
director or controlling person) shall promptly return it to the
Underwriters together with interest, compounded daily, determined on the
basis of the Prime Rate. Any such interim reimbursement payments which are
not made to the Company within 30 days after a request for reimbursement,
shall bear interest at the Prime Rate from the date of such request. This
indemnity agreement will be in addition to any liability which you or such
Underwriter, as the case may be, may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party for indemnity, contribution or otherwise, except to the extent the
indemnifying party is prejudiced as a proximate result of such failure. In
case any such action is brought against any indemnified party, and such
indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to
the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the
-------- -------
defendants in any such action include both the indemnified party and the
indemnifying party, and the indemnified party shall have reasonably
concluded that there may be a conflict between the positions of the
indemnifying party and the indemnified party in conducting the defense of
any such action, or that there may be legal defenses available to it and/or
other indemnified parties which are different from, or additional, to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal defenses,
and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume
the defense of such action, and approval by the indemnified party and its
counsel, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the
proviso to the next preceding sentence, or (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after
notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party (it
being understood, however, that the indemnifying party shall not
22
<PAGE>
be liable for the expenses of more than one separate counsel (in addition
to any local counsel) representing the indemnified parties who are parties
to such action; provided, however, if an indemnified party in any such
-------- -------
action shall have concluded that there may be legal defenses or rights
available to it which are different from, in actual or potential conflict
with, or additional to those available to other indemnified parties, such
party shall have the right to select an additional single law firm to act
as its separate counsel).
(d) If the indemnification provided for in this Section 7 is required
by its terms but is for any reason held to be unavailable to, or otherwise
insufficient to hold harmless an indemnified party under subsections (a)
and (b) of this Section 7 in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party, as a result of any losses, claims, damages, liabilities
or expenses referred to herein, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and you or the
Underwriters, as the case may be, from the offering of the Series B
Preferred Shares, or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above, but
also the relative fault of the Company and you or the Underwriters, as the
case may be, in connection with the statements or omissions or inaccuracies
in the representations and warranties herein, or failure to comply with
obligations under law or this Agreement, which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on
the one hand, and the Underwriters, on the other hand, shall be deemed to
be in the same respective proportions as the total proceeds (net of
underwriting commissions, but before deducting expenses) from the Offering
received by the Company, and the total underwriting commissions received by
the Underwriters, bear to the aggregate public offering price of the Series
B Preferred Shares. The relative fault of the Company and the Underwriters
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact or the inaccurate or the alleged
inaccurate representation and/or warranty or the failure to comply with law
or obligations hereunder relates to information supplied by the Company or
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in subsection (c) of this
Section 7, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
The provisions set forth in subsection (c) of this Section 7 with respect
to notice of commencement of any action shall apply if a claim for
contribution is to be made under this subsection (d); provided, however,
-------- -------
that no additional notice shall be required with respect to any action for
which notice has been given under subsection (c) for purposes of
indemnification. The Company and you or the Underwriters, as the case may
be, agree that it would not be just and equitable if contribution pursuant
to this Section 7
23
<PAGE>
were determined solely by pro rata allocation, or by any other method of
allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this
Section 7, no Underwriter shall be required to contribute any amount in
excess of the amount of the total underwriting discounts and commissions
received by such Underwriter in connection with the Series B Preferred
Shares underwritten by it and distributed to the public. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 7(a) and 7(b),
including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board
of Governors of the New York Stock Exchange, Inc., or pursuant to the Code
of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or written notice
of intention to arbitrate, including designation of the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the
party responding to said demand or notice is authorized to do so. Such an
arbitration would be limited to the operation of the interim reimbursement
provisions contained in Sections 7(a) and 7(b) and would not resolve the
ultimate propriety or enforceability of the obligation to reimburse
expenses which is created by the provisions of such Sections 7(a) and 7(b).
SECTION 8. Default of Underwriters. It shall be a condition to this
-----------------------
Agreement and the obligation of the Company to sell and deliver the Series B
Preferred Shares hereunder, and a condition of the obligation of each
Underwriter to purchase the Series B Preferred Shares in the manner as described
herein, that, except as hereinafter in this paragraph provided, each of the
Underwriters shall purchase and pay for all the Series B Preferred Shares agreed
to be purchased by such Underwriter hereunder upon tender to you, individually
or as the Representative of the Underwriters, of all such shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Series B Preferred Shares hereunder on either the First
or Second Closing Date, and the aggregate number of Series B Preferred Shares
which such defaulting Underwriter or Underwriters agreed but failed to purchase
on such Closing Date does not exceed 10% of the total number of Series B
Preferred Shares which the Underwriters are obligated to purchase on such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Series B
Preferred Shares which such defaulting Underwriters agreed but failed to
purchase on such Closing Date. If any Underwriter or Underwriters so default,
and the aggregate number of Series B Preferred Shares with respect to which such
default occurs is more than the above percentage, and arrangements satisfactory
to the Representatives and the Company for the purchase of such Series B
Preferred Shares by other persons are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of
24
<PAGE>
any non-defaulting Underwriter or the Company except for the expenses to be paid
by the Company pursuant to Section 5, and except to the extent provided in
Section 7.
If applicable, in the event that Series B Preferred Shares to which a
default relates are to be purchased by the nondefaulting entities or by another
party or parties, you or the Company shall have the right to postpone the First
or Second Closing Date, as the case may be, for not more than five business days
in order that the necessary changes in the Registration Statement, the
Prospectus, any Prospectus Supplement and any other documents, as well as any
other arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 8. Nothing herein will relieve you or a defaulting Underwriter from
liability for its default.
SECTION 9. Termination. Without limiting the right to terminate this
-----------
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you,
or by you by notice to the Company, at any time prior to the consummation
of the Offering, and any such termination shall be without liability on the
part of the Company to you or any Underwriter (except for the expenses to
be paid or reimbursed by the Company pursuant to Section 5 and except to
the extent provided in Section 7) or of you or any Underwriter to the
Company (except to the extent provided in Section 7).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company, (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally, or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange, or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by
federal or New York authorities, (ii) if an outbreak of major hostilities
or other national or international calamity or any substantial change in
political, financial or economic conditions shall have occurred, or shall
have accelerated or escalated to such an extent, as, in your judgment, to
affect materially and adversely the marketability of the Series B Preferred
Shares, (iii) if any adverse event shall have occurred or shall exist which
makes untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or Prospectus or which
is not reflected in the Registration Statement or Prospectus but should be
reflected therein in order to make the statements or information contained
therein, not misleading in any material respect, or (iv) if there shall be
any action, suit or proceeding pending or threatened, or there shall have
been any development or prospective development involving particularly the
business or properties or securities of the Company, which, in your
judgment, is reasonably likely to materially and adversely affect the
Company's business or earnings, and makes it impracticable, or inadvisable
to offer or sell the Series B Preferred Shares. Any
25
<PAGE>
termination pursuant to this subsection (b) shall be without liability on
your part or the part of any Underwriter to the Company or on the part of
the Company to you or any Underwriter (except for expenses to be paid or
reimbursed by the Company pursuant to Section 5 (which shall not be
required to be paid upon termination pursuant to clause (i) or (ii) above),
and except to the extent provided in Section 7).
SECTION 10. Representations and Indemnities to Survive Delivery. The
---------------------------------------------------
respective indemnities, agreements, representations, warranties and other
statements of the parties hereto, and of their respective officers set forth in
or made pursuant to this Agreement, will remain in full force and effect,
regardless of any investigation made by or on behalf of the Underwriters, the
Company, or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Series B Preferred Shares sold hereunder, and any termination of this
Agreement.
SECTION 11. Notices. All communications hereunder shall be in writing and,
-------
if sent to the Representatives, shall be mailed, delivered or telegraphed and
confirmed to you at Friedman, Billings, Ramsey & Co., Inc., 1001 Nineteenth
Street North, Arlington, Virginia 22209, Attention: James D. Locke, and BT
Securities Corporation, 130 Liberty Street, New York, New York 10006, Attention:
Salvatore Palazzolo with a copy to Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
1333 New Hampshire Avenue, N.W., Washington, D.C. 20036, Attention: Earl Segal;
and if sent to the Company shall be mailed, delivered or telegraphed and
confirmed to the Company at The CRI Building, 11200 Rockville Pike, Rockville,
Maryland 20852, Attention: Cynthia O. Azzara, Senior Vice President, with a
copy to Swidler & Berlin, Chartered, 3000 K Street, N.W., Washington, D.C.
20007, Attention: Morris F. DeFeo, Jr. The Company or you may change the
address for receipt of communications hereunder by giving notice to the other.
SECTION 12. Successors. This Agreement will inure to the benefit of, and be
----------
binding upon the parties hereto, and to the benefit of the officers and
directors and controlling persons referred to in Section 7, and in each case
their respective successors, personal representatives and assigns, and no other
person will have any right or obligation hereunder. Notwithstanding the
foregoing, this Agreement shall not be assignable by the parties. The term
"successors" shall not include any purchaser of the Series B Preferred Shares as
such from the Underwriters merely by reason of such purchase.
SECTION 13. Partial Unenforceability. The invalidity or unenforceability of
------------------------
any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
26
<PAGE>
SECTION 14. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the Commonwealth of Virginia.
SECTION 15. General. This Agreement constitutes the entire agreement of
-------
the parties to this Agreement, and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only, and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and you.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement between the Company and the Underwriters, all in
accordance with its terms.
Very truly yours.
CRIIMI MAE INC.
By:
------------------------------------
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted by us
in Arlington, Virginia as of the date
first above written.
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
For itself and as Representative of the
Underwriters in the attached Schedule A.
BY: FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
By:
-----------------------------------------
Name:
Title:
27
<PAGE>
BT SECURITIES CORPORATION
For itself and as Representative of
the Underwriters in the attached
Schedule A.
BY: BT SECURITIES CORPORATION
By:_______________________________________
Name:
Title:
28
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
NUMBER OF
FIRM SHARES TO
UNDERWRITERS BE PURCHASED
------------ ------------
<S> <C>
Friedman, Billings, Ramsey & Co., Inc...... 840,000
BT Securities Corporation.................. 840,000
Advest, Inc................................ 42,000
Everen Securities, Inc..................... 42,000
Interstate/Johnson Lane, Corporation....... 42,000
Legg Mason Wood Walker, Incorporated....... 42,000
McDonald & Company Securities, Inc......... 42,000
The Ohio Company........................... 42,000
Scott & Stringfellow, Inc.................. 42,000
Stitfel, Nicolaus & Company, Incorporated.. 42,000
Sutro & Co., Incorporated.................. 42,000
Tucker Anthony Incorporated................ 42,000
============
TOTAL 2,100,000
</TABLE>
29
<PAGE>
Exhibit 4.1
ARTICLES SUPPLEMENTARY
TO THE
ARTICLES OF INCORPORATION
OF
CRIIMI MAE INC.
CRIIMI MAE INC., a Maryland corporation (the "Corporation"), by and
through its undersigned Executive Vice President, does hereby certify that:
A. On July 16, 1996, the Board of Directors of the Corporation (the
"Board of Directors"), pursuant to Section 2-105 of the Maryland General
Corporation Law (the "GCL") and Article SIXTH of the Articles of Incorporation
of the Corporation duly classified 3,000,000 unissued shares of the
Corporation's preferred stock, $.01 par value per share ("Preferred Stock"),
into a class of preferred stock designated "Series B Cumulative Convertible
Preferred Stock" (the "Series B Preferred Stock") and established and fixed the
preferences, conversion or other rights, voting powers, restrictions or terms or
conditions of redemption of such shares of stock, and authorized the execution
and delivery of these Articles Supplementary to the Maryland State Department of
Assessments and Taxation for filing pursuant to Section 2-208 of the GCL.
B. The terms of the Series B Preferred Stock, as set by the Board of
Directors, are as follows:
1. Definitions. For the purposes of these Articles Supplementary, the
-----------
following terms shall have the meanings indicated:
"Base Common Dividend Rate" shall mean $.30 per share of Common Stock,
subject to adjustment as described in Section 4(d).
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York or Maryland are
authorized or obligated by law or executive order to close.
"Common Stock" shall mean the common stock of the Corporation, par
value $.01 per share.
"Conversion Ratio" shall equal 2.2844, subject to adjustment as
described in Section 4(d)..
"Conversion Premium" shall equal three percent (3%).
Page 5
<PAGE>
"Conversion Price" shall mean $10.94 per share of Common Stock,
subject to adjustment as described in Section 10(f).
"Liquidation Value" with respect to a share of Series B Preferred
Stock shall mean $25.00.
"Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
"Redemption Price" with respect to a share of Series B Preferred Stock
shall mean $25.00.
"Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
2. Designation and Number. The shares of such series of Preferred
----------------------
Stock shall be designated as "Series B Cumulative Convertible Preferred Stock"
(the "Series B Preferred Stock"). The number of shares initially constituting
the Series B Preferred Stock shall be 3,000,000, which number may be decreased
(but not increased) by the Board of Directors without a vote of the holders of
Series B Preferred Stock; provided, however, that such number may not be
decreased below the number of then outstanding shares of Series B Preferred
Stock.
3. Rank The Series B Preferred Stock shall, with respect to dividend
----
rights and rights upon liquidation, dissolution or winding up, rank (i) senior
to the Common Stock and to all other capital stock of the Corporation the terms
of which specifically provide that such capital stock ranks junior to the Series
B Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Corporation, (ii) on a parity with the
Corporation's Series A Cumulative Convertible Preferred Stock, par value $.01
per share (the "Series A Preferred Stock"), and all other capital stock of the
Corporation the terms of which specifically provide that such capital stock
ranks on a parity with the Series B Preferred Stock with respect to dividend
rights or rights upon liquidation, dissolution or winding up of the Corporation
and (iii) junior to all capital stock of the Corporation the terms of which
specifically provide that such capital stock ranks senior to the Series B
Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Corporation.
4. Dividends and Distributions. (a) The cash dividend rate on shares
---------------------------
of the Series B Preferred Stock shall equal the sum of (i) $0.68 per share per
quarter (equivalent to $2.72 per share per annum) plus (ii) the product of (x)
the excess over the Base Common Dividend Rate, if any, of the quarterly cash
dividend declared or paid in respect of each share of Common Stock for the
applicable quarter, (y) the Conversion Ratio and (z) one plus the Conversion
Premium. The holders of shares of Series B Preferred Stock, in preference to
the holders of shares of Common Stock and of any other shares of capital stock
of the Corporation ranking junior to the Series B Preferred Stock
Page 6
<PAGE>
as to payment of dividends, shall be entitled to receive, when, as and if
declared by the Board of Directors, out of the assets of the Corporation legally
available therefor, cumulative cash dividends, payable in quarterly installments
on the last Business Day of each calendar quarter in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date") commencing on
September 30, 1996. Each such quarterly dividend shall be fully cumulative, to
the extent not paid, and shall accrue (whether or not earned or declared),
without interest, from the date of issuance of the Series B Preferred Stock, and
thereafter from the first day of the quarterly period in which such dividend may
be payable as herein provided. Dividends payable for each quarterly dividend
period (including the period corresponding to the initial Quarterly Dividend
Payment Date on September 30, 1996) shall be computed by dividing the annual
dividend by four. Dividends payable with respect to any partial dividend period
(other than the initial Quarterly Dividend Payment Date) shall be computed on
the basis of a 360-day year of twelve 30-day months.
(b) Dividends paid on the shares of the Series B Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated among all such shares of Series B
Preferred Stock and all other shares of capital stock of the Corporation ranking
on a parity as to dividends with the Series B Preferred Stock, including,
without limitation, the Series A Preferred Stock ("Dividend Parity Stock"), at
the time outstanding pro rata so that the amount of dividends declared per share
of Series B Preferred Stock and the Dividend Parity Stock shall in all cases
bear to each other the same ratio that accrued dividends per share on the Series
B Preferred Stock and the Dividend Parity Stock bear to each other. The Board
of Directors may fix a record date for the determination of holders of shares of
the Series B Preferred Stock entitled to receive payment of a dividend declared
thereon, which record date shall be no more than sixty (60) days nor less than
ten (10) days prior to the date fixed for the payment thereof.
(c) Any dividend payment made on shares of the Series B Preferred
Stock shall first be credited against the earliest accrued but unpaid dividend
due with respect to shares of the Series B Preferred Stock which remains
payable.
(d) In case the Corporation shall (A) pay a dividend or make a
distribution on shares of its Common Stock in Common Stock, (B) subdivide or
reclassify its outstanding shares of Common Stock into a greater number of
shares or (C) combine or reclassify its outstanding shares of Common Stock into
a smaller number of shares:
(i) the Base Common Dividend Rate in effect immediately prior
thereto shall be adjusted retroactively as provided below so that the Base
Common Dividend Rate thereafter shall be determined by multiplying the Base
Common Dividend Rate by a fraction of which the denominator shall be the
number of shares of Common Stock outstanding immediately following such action
and of which the numerator shall be the number of shares of Common Stock
outstanding immediately prior thereto; and
Page 7
<PAGE>
(ii) the Conversion Ratio in effect immediately prior thereto
shall be adjusted retroactively as provided below so that the Conversion Ratio
thereafter shall be determined by multiplying the Conversion Ratio by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately following such action and of which the denominator
shall be the number of shares of Common Stock outstanding immediately prior
thereto.
Such adjustments shall be made whenever any event listed in the first sentence
of this Section 4(d) shall occur and shall become effective retroactively
immediately after the record date in the case of a dividend (pursuant to Section
4(d)(A)) and immediately after the effective date in the case of a subdivision,
combination or reclassification (pursuant to Section 4(d)(B) or 4(d)(C)). No
adjustment in the Base Common Dividend Rate or the Conversion Ratio shall be
required unless the adjustment would require an increase or decrease of at least
1% of each of the Base Common Dividend Rate and the Conversion Ratio then in
effect; provided, however, that any adjustment that by reason of this Section
4(d) is not required to be made shall be carried forward and taken into account
in any subsequent adjustment. Notwithstanding anything to the contrary in this
Section 4(d), Common Stock issued pursuant to CRIIMI MAE's dividend reinvestment
plan shall not result in any adjustment to the Base Common Dividend Rate or the
Conversion Ratio.
(e) The holders of shares of the Series B Preferred Stock shall not
be entitled to receive any dividends or other distributions except as expressly
provided herein.
5. Voting Rights. So long as the Series B Preferred Stock remains
-------------
outstanding, the holders of shares of the Series B Preferred Stock shall have
the following voting rights:
(a) The holders of shares of Series B Preferred Stock shall have no
voting rights except as set forth below or as otherwise from time to time
required by law.
(b) The affirmative vote or consent, in person or by proxy, in
writing or at a special or annual meeting of stockholders called for the
purpose, of the holders of at least:
(i) two-thirds of the outstanding shares of Series B Preferred
Stock, voting separately as a class, shall be necessary to authorize,
create or increase the authorized or issued amount of, any class or series
of the Corporation's capital stock ranking prior to the Series B Preferred
Stock with respect to payment of dividends or distribution of assets upon
liquidation, dissolution or winding up or reclassify any authorized capital
stock of the Corporation into any such capital stock, or create, authorize
or issue any obligation or security convertible into or evidencing the
right to purchase any such capital stock;
(ii) a majority of the outstanding shares of Series B Preferred
Stock, voting separately as a class, shall be necessary to authorize,
create or increase the authorized or
Page 8
<PAGE>
issued amount of, any class or series of the Corporation's capital stock
ranking on a parity with the Series B Preferred Stock with respect to
payment of dividends or distribution of assets upon liquidation,
dissolution or winding up or reclassify any authorized capital stock of the
Corporation into any such capital stock, or create, authorize or issue any
obligation or security convertible into or evidencing the right to purchase
any such capital stock; or
(iii) two-thirds of the outstanding shares of Series B Preferred
Stock, voting separately as a class, shall be necessary to amend, alter or
repeal any of the provisions of the Articles of Incorporation or the
Articles Supplementary to the Articles of Incorporation for the Series B
Preferred Stock, whether by merger, consolidation or otherwise (an
"Event"), so as to materially and adversely affect any right, preference,
privilege or voting power of the Series B Preferred Stock or the holders
thereof;
provided, however, with respect to the occurrence of any of the Events
set forth in Section 5(b)(iii), so long as the Series B Preferred Stock remains
outstanding with the terms thereof materially unchanged, the occurrence of any
such Event shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting power of holders of the Series B Preferred
Stock; and provided, further, that (x) any increase in the amount of authorized
Common Stock or the authorization, creation or issuance of any other class or
series of capital stock or (y) any increase in the amount of authorized shares
of any other class or series of capital stock, in each case ranking on a parity
with or junior to the Series B Preferred Stock with respect to the payment of
dividends or the distribution of assets upon liquidation, dissolution or winding
up, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
(c) During any period in which dividends on the Series B Preferred
Stock are cumulatively in arrears for not less than six quarterly dividend
payments (whether or not consecutive), then the number of directors constituting
the Board of Directors shall, without further action, be increased by two and
the holders of shares of the Series B Preferred Stock shall have, in addition to
the other voting rights set forth herein, the exclusive right, voting separately
as a single class, to elect the directors of the Corporation to fill such newly
created directorships, the remaining directors to be elected by the other
classes of stock entitled to vote therefor at each meeting of stockholders held
for the purpose of electing directors. Such additional voting rights shall
continue until such time as all dividends accumulated on the Series B Preferred
Stock shall have been paid in full, at which time such additional directors
shall cease to be directors and such additional voting right of the holders of
Series B Preferred Stock shall terminate subject to revesting in the event of
each and every subsequent event of the character indicated above. In no event
shall the holders of Series B Preferred Stock voting separately as a class be
entitled to elect a total of more than two directors to the Board of Directors
pursuant to this Section 5(c).
(d)
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(i) The foregoing rights of holders of shares of Series B
Preferred Stock to take any actions as provided in this Section 5 may be
exercised at any annual meeting of stockholders or at a special meeting of
stockholders held for such purpose as hereinafter provided or at any
adjournment thereof, or by the written consent, delivered to the Secretary
of the Corporation, of the holders of the minimum number of shares required
to take such action.
So long as such right to vote continues (and unless such right has
been exercised by written consent of the minimum number of shares required
to take such action), the Chairman of the Board of Directors may call, and
upon the written request of holders of record of 20% of the outstanding
shares of Series B Preferred Stock addressed to the Secretary of the
Corporation at the principal office of the Corporation, shall call, a
special meeting of the holders of shares entitled to vote as provided
herein. Such meeting shall be held within sixty (60) days after delivery
of such request to the Secretary, at the place and upon the notice provided
by law and in the by-laws of the Corporation for the holding of meetings of
stockholders.
(ii) At each meeting of stockholders at which the holders of
shares of Series B Preferred Stock shall have the right, voting separately
as a single class to elect directors of the Corporation as provided in this
Section 5 or to take any action, the presence in person or by proxy of the
holders of record of a majority of the total number of shares of Series B
Preferred Stock then outstanding and entitled to vote on the matter shall
be necessary and sufficient to constitute a quorum. At any such meeting or
at any adjournment thereof:
(A) the absence of a quorum of the holders of shares of Series
B Preferred Stock shall not prevent the election of directors other than
those to be elected by the holders of shares of Series B Preferred Stock
and the absence of a quorum of the holders of shares of any other class
or series of capital stock shall not prevent the election of directors to
be elected by the holders of shares of Series B Preferred Stock or the
taking of any action as provided in this Section 5; and
(B) in the absence of a quorum of the holders of shares of
Series B Preferred Stock, a majority of the holders of such shares
present in person or by proxy shall have the power to adjourn the meeting
as to the actions to be taken by the holders of shares of Series B
Preferred Stock from time to time and place to place without notice other
than announcement at the meeting until a quorum shall be present.
For the taking of any action as provided in Sections 5(b) and 5(c) by
the holders of Series B Preferred Stock, each such holder shall have one
vote for each share of such stock standing in such holder's name on the
transfer books of the Corporation as of any record date fixed for such
purpose or, if no such date be fixed, at the close of business on the
Business
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Day next preceding the day on which notice is given, or if notice is
waived, at the close of business on the Business Day next preceding the day
on which the meeting is held.
Each director elected by the holders of shares of Series B Preferred
Stock as provided in Section 5(c) shall, unless his or her term shall
expire earlier upon payment in full by the Corporation of all accumulated
dividends on the Series B Preferred Stock, hold office until the annual
meeting of stockholders next succeeding his election or until his
successor, if any, is elected and qualified.
In case any vacancy shall occur among the directors elected by the
holders of shares of Series B Preferred Stock as provided in Section 5(c),
such vacancy may be filled for the unexpired portion of the term by vote of
the remaining director theretofore elected by such holders (if there is a
remaining director), or such director's successor in office. If any such
vacancy is not so filled within twenty (20) days after the creation thereof
or if both directors so elected by the holders of Series B Preferred Stock
shall cease to serve as directors before their terms shall expire, the
holders of the Series B Preferred Stock then outstanding and entitled to
vote for such directors may, by written consent as herein provided, or at a
special meeting of such holders called as provided herein, elect successors
to hold office for the unexpired terms of such directors whose places shall
be vacant.
Any director elected by the holders of shares of Series B Preferred
Stock voting separately as a single class may be removed from office with
or without cause by the vote or written consent of the holders of at least
a majority of the outstanding shares of Series B Preferred Stock. A
special meeting of the holders of shares of Series B Preferred Stock may be
called in accordance with the procedures set forth in Section 5(d)(i).
6. Certain Restrictions. (a) If shares of Series B Preferred Stock
--------------------
are outstanding, unless full cumulative dividends have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Series B Preferred Stock for all past dividend
periods and the then current dividend period, other than pursuant to Section
4(b), the Corporation will not declare, make, pay or set apart for payment or
distribution any dividends or other distributions (other than in Common Stock or
other capital shares ranking junior to the Series B Preferred Stock as to
dividends and upon liquidation, dissolution or winding up) on the Common Stock
or any other series or class of capital stock ranking, as to dividends, junior
to the Series B Preferred Stock for any period. No full dividends shall be paid
or declared and set apart for payment on any Dividend Parity Stock for any
period unless full cumulative dividends have been, or contemporaneously are,
paid or declared and set apart for payment on the Series B Preferred Stock for
all dividend payment periods terminating on or prior to the date of payment of
such full cumulative dividends. No full dividends shall be paid or declared and
set apart for payment on the Series B Preferred Stock for any period unless full
cumulative dividends have been, or contemporaneously are, paid or declared and
set apart for payment on any Dividend Parity Stock for
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all dividend payment periods terminating on or prior to the date of payment of
such full cumulative dividends.
(b) If shares of Series B Preferred Stock are outstanding, unless
full cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for such
payment on the Series B Preferred Stock for all past dividend periods and the
then current dividend period, the Corporation shall not redeem, purchase or
otherwise acquire for any consideration (or pay or make available money for a
sinking fund for the redemption of) any Common Stock or any other series or
class of capital stock ranking, as to dividends or upon liquidation, dissolution
or winding up, on a parity with or junior to the Series B Preferred Stock
(except by conversion into or exchange for Common Stock or other capital stock
of the Corporation ranking junior to the Series B Preferred Stock as to
dividends and upon liquidation, dissolution or winding up); provided, however,
the foregoing shall not prevent the purchase or acquisition of any shares of
capital stock of the Corporation by the Corporation (i) in order to preserve the
status of the Corporation as a real estate investment trust ("REIT") or (ii)
pursuant to a purchase or exchange offer made on comparable terms to all holders
of outstanding shares of capital stock of the Corporation.
(c) The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation unless the Corporation could, pursuant to
Section 6(b), purchase or otherwise acquire such shares at such time and in such
manner.
7. Redemption. (a) The Series B Preferred Stock shall not be
----------
redeemable in whole or in part prior to the tenth yearly anniversary of the date
of issuance of the Series B Preferred Stock. On or after the tenth yearly
anniversary of the date of issuance of the Series B Preferred Stock, to the
extent the Corporation shall have funds legally available therefor, the Series B
Preferred Stock shall be subject to redemption in whole or in part, in cash, at
the option of the Corporation on any Quarterly Dividend Payment Date, at the
Redemption Price, together in each case with an amount equal to accrued and
unpaid dividends to (and including) the date fixed for redemption. On and after
the date fixed for redemption, provided that the Redemption Price (including any
accrued and unpaid dividends to (and including) the date fixed for redemption)
has been duly paid or deposited in trust for the benefit of the holders of the
Series B Preferred Stock, dividends shall cease to accrue on the Series B
Preferred Stock called for redemption, such shares shall no longer be deemed to
be outstanding and all rights of the holders of such shares as stockholders of
the Corporation shall cease, except the right to receive the moneys payable upon
such redemption, without interest thereon, upon surrender of the certificates
evidencing such shares. Any moneys deposited in trust by the Corporation which
shall not be required for redemption because of the exercise of any right of
conversion by the holders of the Series B Preferred Stock, shall be repaid to
the Corporation forthwith. Any moneys deposited in trust by the Corporation and
unclaimed at the end of two years from the date fixed for such redemption shall
be repaid to the Corporation upon its written request,
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after which repayment the holders of the shares of Series B Preferred Stock so
called for redemption shall look only to the Corporation for the payment
thereof.
(b) Notice of any redemption pursuant to Section 7(a) shall be given
to the holders of shares of Series B Preferred Stock once not less than thirty
(30) or more than sixty (60) days prior to the date fixed for redemption.
Notice of redemption shall be given by first class mail to each such holder's
address as shown on the stock books of the Corporation and will specify (i) the
date fixed for redemption, (ii) the number of shares of Series B Preferred Stock
to be redeemed, (iii) the Redemption Price, (iv) the place or places where
certificates for shares of Series B Preferred Stock are to be surrendered for
payment of the Redemption Price, (v) that dividends on the shares of Series B
Preferred Stock to be redeemed will cease to accrue on the date fixed for
redemption, and (vi) the date upon which the holders' conversion rights will
terminate. If less than all shares of Series B Preferred Stock then outstanding
are to be redeemed, the shares of Series B Preferred Stock will be redeemed pro
rata from among the holders of shares of Series B Preferred Stock then
outstanding.
(c) If a notice of redemption has been given pursuant to this Section
7, and any holder of shares of the Series B Preferred Stock shall, prior to the
close of business on the fifth day preceding the date fixed for redemption, give
written notice to the Corporation pursuant to Section 10 below of the conversion
of any or all of the shares to be redeemed held by the holder (accompanied by a
certificate or certificates for such shares, duly endorsed, or assigned to the
Corporation, and any necessary transfer tax payment, as required by Section 10
below), then such redemption shall not become effective as to such shares to be
converted and such conversion shall become effective as provided in Section 10
below, whereupon any funds deposited by the Corporation for the redemption of
such shares shall (subject to any right of the holder of such shares to receive
the dividend payable thereon as provided in Section 10 below) immediately upon
such conversion be returned to the Corporation or, if then held in trust by the
Corporation, shall be discharged from the trust.
8. Reacquired Shares. Any shares of Series B Preferred Stock
-----------------
converted, redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares of Series B Preferred Stock shall upon their
cancellation, and upon the filing of an appropriate certificate with the
Maryland State Department of Assessments and Taxation, become authorized but
unissued shares of Preferred Stock and may be reissued as part of another series
of Preferred Stock subject to the conditions or restrictions on issuance set
forth herein, to the extent any Series B Preferred Stock remains outstanding.
9. Liquidation, Dissolution or Winding Up. (a) Upon any voluntary or
--------------------------------------
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation then, before any distribution or payment shall be made to the
holders of any shares of Common Stock or any other class or series of capital
stock of the Corporation ranking junior to the Series B Preferred Stock in the
distribution of assets upon any liquidation, dissolution or winding up of the
Corporation, the holders of Series
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<PAGE>
B Preferred Stock shall be entitled to receive out of assets of the Corporation
legally available for distribution to stockholders, liquidating distributions in
the amount of the Liquidation Value per share, plus an amount equal to all
dividends accrued and unpaid thereon as of the date of liquidation, dissolution
or winding up. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series B Preferred
Stock will have no right or claim to any of the remaining assets of the
Corporation. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of the Corporation
are insufficient to pay the amount of the liquidating distributions on all
outstanding shares of Series B Preferred Stock and the corresponding amounts
payable on all shares of other classes or series of capital stock of the
Corporation ranking on a parity with the Series B Preferred Stock in the
distribution of assets upon liquidation, dissolution or winding up, then the
holders of the Series B Preferred Stock and all other such classes or series of
capital stock shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
(b) Neither the consolidation, merger or other business combination
of the Corporation with or into any other Person, nor the sale, lease or
conveyance of all or substantially all of the property or business of the
Corporation shall be deemed to constitute a liquidation, dissolution or winding
up of the Corporation for purposes of this Section 9.
10. Conversion. (a) Holders of shares of Series B Preferred Stock
----------
shall have the right, exercisable at any time, except in the case of shares of
Series B Preferred Stock called for redemption (as described in Section 7
above), to convert shares of Series B Preferred Stock into fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) at the Conversion Price. The number of shares of
Common Stock into which a share of Series B Preferred Stock shall be convertible
shall be determined by dividing the Liquidation Value by the Conversion Price.
In the case of shares of the Series B Preferred Stock called for redemption,
conversion rights shall expire at the close of business on the fifth Business
Day immediately preceding the date fixed for redemption. No payment or
adjustment for accrued dividends on the shares of Series B Preferred Stock is to
be made on conversion, but holders of record of shares of Series B Preferred
Stock on a record date applicable to a Quarterly Dividend Payment Date shall be
entitled to receive such quarterly dividend payment notwithstanding the
conversion of such shares prior to such Quarterly Dividend Payment Date.
(b) Holders of Series B Preferred Stock may convert such Series B
Preferred Stock into Common Stock by surrendering to the Corporation's transfer
agent, Registrar and Transfer Company (the "Transfer Agent"), at its offices in
the City of New York, New York or New Jersey, the certificate of such Series B
Preferred Stock to be converted, properly endorsed and medallion certified and
accompanied by a written notice stating that such holder elects to convert all
or a specified whole number of such shares in accordance with the provisions of
this Section 10 and specifying the name or names in which such holder wishes the
certificate or certificates for shares
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<PAGE>
of Common Stock to be issued (a "Conversion Notice"). In case a Conversion
Notice shall specify a name or names other than that of such holder, such
Conversion Notice shall be accompanied by payment of all transfer taxes, if any,
payable upon the issuance of shares of Common Stock in such name or names.
Other than such taxes, the Corporation will pay any and all issue and other
taxes (other than taxes based on income) that may be payable in respect of any
issue or delivery of shares of Common Stock on conversion of Series B Preferred
Stock pursuant hereto.
(c) As promptly as practicable, and in any event within five Business
Days after the date of delivery of the shares of Series B Preferred Stock to be
converted (and the Conversion Notice), the Corporation shall deliver or cause to
be delivered (i) certificates representing the number of validly issued, fully
paid and nonassessable full shares of Common Stock to which the holder of shares
of Series B Preferred Stock being converted shall be entitled and (ii) if less
than the full number of shares of Series B Preferred Stock evidenced by the
surrendered certificate or certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificate or certificates less the number of shares being
converted. All conversions shall be deemed to have been made at the close of
business on the date of delivery of the Conversion Notice, so that the rights of
the holder thereof as to the shares being converted shall cease except for the
right to receive shares of Common Stock in accordance herewith, and the Person
entitled to receive the shares of Common Stock shall be treated for all purposes
as having become the record holder of such shares of Common Stock at such time.
The Corporation shall not be required to convert, and no surrender of shares of
Series B Preferred Stock shall be effective for that purpose, while the transfer
books of the Corporation for the Common Stock are closed for any purpose (but
not for any period in excess of ten (10) calendar days); but the surrender of
shares of Series B Preferred Stock for conversion during any period while such
books are so closed shall become effective for conversion immediately upon the
reopening of such books, as if the conversion had been made on the date such
shares of Series B Preferred Stock were surrendered, and at a rate of conversion
which assumes the conversion took place during the period immediately prior to
the closing of such books.
(d) No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon conversion of shares of the Series B
Preferred Stock. If more than one share of the Series B Preferred Stock shall
be surrendered for conversion at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of the Series B Preferred Stock so
surrendered. Instead of any fractional share of Common Stock otherwise issuable
upon conversion of any shares of the Series B Preferred Stock, the Corporation
shall pay a cash adjustment in respect to such fraction in an amount equal to
the same fraction of Sale Price (as defined below) of the Common Stock at the
close of business on the day of conversion. In the absence of a Sale Price, the
Board of Directors shall in good faith determine the current market price on the
basis of such quotation as it considers appropriate. As used herein, "Sale
Price" means the closing sales price of the Common Stock (or if no sale price is
reported, the average of the high and low bid prices) as reported by the
principal
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<PAGE>
national or regional stock exchange on which the Common Stock is listed or, if
the Common Stock is not listed on a national or regional stock exchange, as
reported by the Nasdaq Stock Market and if not so reported, then as reported by
the National Quotation Bureau Incorporated.
(e) The Corporation shall reserve out of its authorized but unissued
Common Stock or its Common Stock held in treasury enough shares of Common Stock
to permit the conversion of all of the then-outstanding shares of the Series B
Preferred Stock. For the purposes of this Section 10(e), the full number of
shares of Common Stock, then issuable upon the conversion of all then-
outstanding shares of the Series B Preferred Stock shall be computed as if at
the time of computation, all outstanding shares of the Series B Preferred Stock
were held by a single holder. The Corporation shall from time to time, in
accordance with the laws of the State of Maryland, increase the authorized
amount of its Common Stock if at any time the authorized amount of its Common
Stock remaining unissued shall not be sufficient to permit the conversion of all
shares of the Series B Preferred Stock (as provided herein) at the time
outstanding. If any shares of Common Stock required to be reserved for issuance
upon conversion of shares of the Series B Preferred Stock hereunder require
registration with or approval of any governmental authority under any federal or
state law before the shares may be issued upon conversion, the Corporation will
in good faith and as expeditiously as possible endeavor to cause the shares to
be so registered or approved. All shares of Common Stock issued upon conversion
of the shares of the Series B Preferred Stock shall be validly issued, fully
paid and nonassessable.
(f) The Conversion Price shall be subject to adjustment as follows:
(i) In case the Corporation shall (A) pay a dividend or make a
distribution on any class of its capital stock in shares of its Common Stock,
(B) subdivide or reclassify its outstanding shares of Common Stock into a
greater number of shares or (C) combine or reclassify its outstanding shares
of Common Stock into a smaller number of shares, the Conversion Price in
effect immediately prior thereto shall be adjusted retroactively as provided
below so that the Conversion Price thereafter shall be determined by
multiplying the Conversion Price at which the shares of the Series B Preferred
Stock were theretofore convertible by a fraction of which the denominator
shall be the number of shares of Common Stock outstanding immediately
following such action and of which the numerator shall be the number of shares
of Common Stock outstanding immediately prior thereto. Such adjustment shall
be made whenever any event listed above shall occur and shall become effective
retroactively immediately after the record date in the case of a dividend and
immediately after the effective date in the case of a subdivision, combination
or reclassification. Notwithstanding anything to the contrary in this Section
10(f)(i), Common Stock issued pursuant to CRIIMI MAE's dividend reinvestment
plan shall not result in any adjustment to the Conversion Price.
(ii) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them (for a period expiring within
forty-five (45) days after the record
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<PAGE>
date therefor) to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share of Common Stock (as
determined in accordance with the provisions of Section 10(f)(iv) below) at
the record date therefor (the "Current Market Price"), or in case the
Corporation shall issue other securities convertible into or exchangeable for
Common Stock for a consideration per share of Common Stock deliverable upon
conversion or exchange thereof less than the Current Market Price, then the
Conversion Price in effect immediately prior thereto shall be adjusted
retroactively as provided below so that the Conversion Price thereafter shall
be determined by multiplying (A) the Conversion Price at which shares of the
Series B Preferred Stock were theretofore convertible by (B) a fraction of
which the denominator shall be the sum of (1) the number of shares of Common
Stock outstanding on the date of issuance of the convertible or exchangeable
securities, rights or warrants and (2) the number of additional shares of
Common Stock offered for subscription or purchase, and of which the numerator
shall be the sum of (1) the number of shares of Common Stock outstanding on
the date of issuance of such convertible or exchangeable securities, rights or
warrants and (2) the number of additional shares of Common Stock which the
aggregate offering price of the number of shares of Common Stock so offered
would purchase at the Current Market Price per share of Common Stock (as
determined in accordance with the provisions of Section 10(f)(iv) below).
Such adjustment shall be made whenever such convertible or exchangeable
securities, rights or warrants are issued, and shall become effective
retroactively immediately after the record date for the determination of
stockholders entitled to receive such securities. However, upon the
expiration of any right or warrant to purchase Common Stock, the issuance of
which resulted in an adjustment in the Conversion Price pursuant to this
Section 10(f)(ii), if any such right or warrant shall expire and shall not
have been exercised, the Conversion Price shall be recomputed immediately upon
such expiration and effective immediately upon such expiration shall be
increased to the price it would have been (but reflecting any other
adjustments to the Conversion Price made pursuant to the provisions of Section
10(f) after the issuance of such rights or warrants) had the adjustment of the
Conversion Price made upon the issuance of such rights or warrants been made
on the basis of offering for subscription or purchase only that number of
shares of Common Stock actually purchased upon the exercise of such rights or
warrants actually exercised.
(iii) In case the Corporation shall pay a dividend or make a
distribution to all holders of its Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing corporation) of any shares of capital stock of
the Corporation or its subsidiaries (other than Common Stock) or evidences of
its indebtedness or assets (excluding cash dividends payable solely in cash
that may from time to time be fixed by the Board of Directors, or dividends or
distributions in connection with the liquidation, dissolution or winding up of
the Corporation) or rights to subscribe for or purchase any of its securities
or those of its Subsidiaries (excluding those referred to in Sections 10(f)(i)
and 10(f)(ii) above), then in each such case the number of shares of Common
Stock into which each share of the Series B Preferred Stock shall thereafter
be convertible shall be determined by
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<PAGE>
multiplying (A) the Conversion Price in effect on the record date mentioned
below by (B) a fraction, the numerator of which shall be the Current Market
Price per share of Common Stock on the record date mentioned below less the
then fair market value (as determined by the Board of Directors, whose good
faith determination shall be conclusive) as of such record date of the portion
of the capital stock or assets or evidences of indebtedness so distributed or
of such rights or warrants applicable to one share of Common Stock, and the
denominator of which shall be the Current Market Price per share of Common
Stock on such record date; provided, however, that in the event the then fair
market value (as so determined) of the portion of securities so distributed
applicable to one share of Common Stock is equal to or greater than the
Current Market Price per share of Common Stock on the record date mentioned
above, in lieu of the foregoing adjustment, adequate provision shall be made
so that each holder of shares of the Series B Preferred Stock shall have the
right to receive the amount and kind of securities such holder would have
received had such holder converted each such share of the Series B Preferred
Stock immediately prior to the record date for the distribution of the
securities. Such adjustment shall be made whenever any such payment or
distribution is made, and shall become effective retroactively immediately
after the record date for the determination of stockholders entitled to
receive the distribution.
(iv) For the purpose of any computation under Sections 10(f)(ii)
and 10(f)(iii) above, the Current Market Price per share of Common Stock at
any date shall be deemed to be the average Sale Price for the thirty (30)
consecutive trading days commencing forty-five (45) trading days before the
day in question.
(v) No adjustment in the Conversion Price shall be required
unless the adjustment would require an increase or decrease of at least 1% of
the Conversion Price then in effect; provided, however, that any adjustment
that by reason of this Section 10(f) is not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 10(f) shall be made to the nearest cent.
(vi) In the event that, at any time as a result of an adjustment
made pursuant to Section 10(f)(i) or 10(f)(iii) above, the holder of any share
of the Series B Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than shares of
the Common Stock, thereafter the number of such other shares so receivable
upon conversion of any share of the Series B Preferred Stock shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Common Stock contained in
Section 10(f)(i) through 10(f)(v) above, and the other provisions of this
Section 10 with respect to the Common Stock shall apply on like terms to any
such other shares.
(vii) In the event of a distribution of evidence of indebtedness
or other assets (as described in Section 10(f)(iii)) or a dividend to all
holders of Common Stock of rights to
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<PAGE>
subscribe for additional shares of the CRIIMI MAE's capital stock (other than
those referred to in Section 10(f)(ii)), CRIIMI MAE may, instead of making an
adjustment of the Conversion Price, make prior provision so that each holder
who converts such shares of Series B Preferred Stock will be entitled to
receive upon such conversion, in addition to shares of Common Stock, an
appropriate number of such rights, warrants, evidences of indebtedness or
other assets.
(viii) Whenever the Conversion Price is adjusted, as herein
provided, the Corporation shall promptly file with the transfer agent for the
Series B Preferred Stock a certificate of an officer of the Corporation
setting forth the Conversion Price after the adjustment and setting forth a
brief statement of the facts requiring such adjustment and a computation
thereof. The certificate shall be conclusive evidence of the correctness of
the adjustment. The Corporation shall promptly cause a notice of the adjusted
Conversion Price to be mailed to each registered holder of shares of the
Series B Preferred Stock.
(ix) In case of any reclassification of the Common Stock, any
consolidation of the Corporation with, or merger of the Corporation into, any
other entity, any merger of another entity into the Corporation (other than a
merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Corporation), any
sale or transfer of all or substantially all of the assets of the Corporation
or any compulsory share exchange, pursuant to which share exchange the Common
Stock is converted into other securities, cash or other property, then lawful
provision shall be made as part of the terms of such transaction whereby the
holder of each share of the Series B Preferred Stock then outstanding shall
have the right thereafter, during the period such share shall be convertible,
to convert such share only into the kind and amount of securities, cash and
other property receivable upon the reclassification, consolidation, merger,
sale, transfer or share exchange by a holder of the number of shares of Common
Stock of the Corporation into which a share of the Series B Preferred Stock
would have been convertible immediately prior to the reclassification,
consolidation, merger, sale, transfer or share exchange. The Corporation, the
Person formed by the consolidation or resulting from the merger or which
acquires such assets or which acquires the Corporation's shares, as the case
may be, shall make provisions in its certificate or articles of incorporation
or other constituent document to establish such rights. The certificate or
articles of incorporation or other constituent document shall provide for
adjustments, which, for events subsequent to the effective date of the
certificate or articles of incorporation or other constituent document, shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Section 10. The provisions of this Section 10(f)(ix) shall similarly
apply to successive reclassification, consolidations, mergers, sales,
transfers or share exchanges.
(g) The Corporation from time to time may reduce the Conversion Price
by any amount for any period of time if the period is at least twenty (20) days
and if the reduction is irrevocable during the period. Whenever the Conversion
Price is so reduced, the Corporation shall mail to holders of record of the
Series B Preferred Stock a notice of the reduction at least fifteen (15) days
before the
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date the reduced Conversion Price takes effect, stating the reduced Conversion
Price and the period it will be in effect. A voluntary reduction of the
Conversion Price does not change or adjust the Conversion Price otherwise in
effect for purposes of Section 10(f) above.
11. Mandatory Redemption. The shares of the Series B Preferred Stock
--------------------
are not subject to mandatory redemption or sinking fund requirements.
12. REIT Status. Nothing contained in these Articles Supplementary or
-----------
the Articles of Incorporation shall limit the authority of the Board of
Directors to take such other action as it deems necessary or advisable to
protect the Corporation and the interests of the stockholders by preservation of
the Corporation's qualification as a REIT under the REIT Provisions (as defined
in the Articles of Incorporation), including, without limitation, the
enforcement of the provisions of Article EIGHTEENTH of the Articles of
Incorporation.
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IN WITNESS WHEREOF, this instrument has been executed for and on
behalf and in the name of the Corporation by its officers thereunto duly
authorized on August 7, 1996.
CRIIMI MAE INC.
By:
------------------------------
Frederick J. Burchill, Executive Vice President
[Seal]
Attest:
- ---------------------------
Name: H. William Willoughby
Title: Secretary
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<PAGE>
THE UNDERSIGNED, Executive Vice President of the Corporation, who
executed on behalf of the Corporation Articles Supplementary of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
By:
------------------------------
Frederick J. Burchill, Executive Vice President
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<PAGE>
Exhibit 4.2
FORM [Front]
CRIIMI MAE INC.
(Incorporated Under the Laws of the State of Maryland)
- ------------ -----------
NUMBER Certificate SHARES
- ------------ -----------
This certificate is transferable in Series B Cumulative
the City of New York, New York Convertible Preferred Stock
or New Jersey
(See reverse for restrictions
on transfer and definitions)
CUSIP 226603 20 7
THIS CERTIFIES THAT ____________________________ is the owner of ______________
________________ fully paid and non-assessable shares of Series B Cumulative
Convertible Preferred Stock, par value of one cent ($.01) each, of
CRIIMI MAE Inc., transferable on the books of the Corporation by the owner in
person, or by duly authorized attorney, upon the surrender of this Certificate
properly endorsed or assigned. This Certificate and the shares represented
hereby are subject to the laws of the State of Maryland and to the Articles of
Incorporation and By-laws of the Corporation, as now or hereafter amended.
This Certificate is not valid unless countersigned and registered by the
Transfer Agent and by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED
Registrar and Transfer Company Chairman of the Board
TRANSFER AGENT AND REGISTRAR
[SEAL 1993]
AUTHORIZED SIGNATURE Secretary
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<PAGE>
[Back]
CRIIMI MAE Inc.
Article EIGHTEENTH of the Corporation's Articles of Incorporation places
certain restrictions on the ownership of the Corporation's capital stock,
including limitations as to rights to acquire the Corporation's capital stock,
in an aggregate amount in excess of 9.8% of the outstanding capital stock of
the Corporation. The Corporation will furnish to any shareholder, upon request
and without charge, a full or summary statement of (1) the designations,
preferences, limitations, restrictions, and relative rights of the shares of
each class authorized to be issued, (2) the variations in the relative rights
and preferences between the shares of each series of preferred stock so far as
the same have been fixed and determined, and (3) the authority of the board of
directors to fix and determine the relative rights and preferences of subsequent
series. Such request may be made to the transfer agent named on the face hereof
or to the secretary of the Corporation.
-----------------------------------------
Notice of Election to Convert
(Convertible into Common Stock)
The undersigned hereby irrevocably elects to convert_________________
shares of the Series B Cumulative Convertible Preferred Stock represented by
the within certificate into shares of Common Stock of CRIIMI MAE INC. (as such
shares may be constituted on the conversion date) in accordance with the
provisions of the Articles of Incorporation, as amended, of the Corporation.
Dated:
--------------------- -------------------------
Signature
---------------------------------------------------
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT - _______ Custodian_______
(Cust)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minor
Act
----------------------
JT TEN - as joint tenants with right of (State)
survivorship and not as tenants
in common
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, _________________ hereby sell, assign and transfer unto
Please insert social security or other
identifying number of assignee
- ---------------------------------------
| |
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or typewrite name and address, including zip code of assignee)
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<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Shares of the capital stock
- ---------------------------------------------------
represented by the within Certificate, and do hereby irrevocably constitute and
appoint Attorney
-------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
--------------------
- --------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed:
- --------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
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<PAGE>
EXHIBIT 99.1
Contact: Susan B. Railey
(301) 468-3120
James T. Pastore
(202) 546-6451 FOR IMMEDIATE RELEASE
CRIIMI MAE OFFERS CUMULATIVE CONVERTIBLE PREFERRED STOCK
ROCKVILLE, MD, Aug. 8, 1996 - (NYSE:CMM) - CRIIMI MAE Inc., a full-service
commercial mortgage company structured as a real estate investment trust (REIT),
announced the offering of 2,100,000 shares of the company's 10.875% Series B
Cumulative Convertible Preferred Stock (NYSE:CMM-PrB) at an offering price of
$25.00 per share.
The underwriters for the offering are Friedman, Billings, Ramsey & Co., Inc. and
BT Securities Corporation.
The 10.875% Series B Cumulative Convertible Preferred Stock will be convertible,
at any time, into 2.2844 shares of common stock at any time which represents
a conversion premium of 3% over the closing price of the common stock on
August 7, 1996. The quarterly base dividend rate will be $0.68 per share
(equal to $2.72 per annum). The preferred stock will participate in increases
in the common stock dividend above $0.30 per share per quarter. The preferred
stock will not be redeemable by CRIIMI MAE prior to August 8, 2006, and
thereafter it is redeemable at a price of $25.00 per preferred share.
CRIIMI MAE has granted the underwriters an option, exercisable for 30 days, to
purchase up to 315,000 additional shares of preferred stock to cover over-
allotments.
CRIIMI MAE intends to use the proceeds to acquire mortgage investments,
including subordinated CMBS, to sponsor and/or participate in collateralized
mortgage obligation programs and for other general corporate purposes, including
working capital.
A copy of the prospectus is available from the underwriters.
-more-
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<PAGE>
CRIIMI MAE is a full-service commercial mortgage company, structured as a
self-administered REIT. It invests in government insured and guaranteed
mortgages secured by multifamily housing complexes located throughout the United
States and in uninsured mortgage and mortgage-related investments backed by
multifamily and other commercial mortgages, such as higher yielding, higher
risk, subordinated ownership interests in bonds issued in commercial loan
securitizations, using a combination of debt and equity. CRIIMI MAE's principal
objectives are to provide increasing cash dividends to its shareholders and to
enhance the value of its Common Shares. CRIIMI MAE's strategy is to increase
recurring earnings, including both investment income and fee income. To help
achieve that goal, CRIIMI MAE focuses on several areas: building a quality
portfolio, efficient financing of its investments, and active portfolio
management and mortgage servicing.
This release shall not constitute an offer to sell or the solicitation of
an offer to sell or the solicitation of an offer to buy nor shall there be any
sales of these securities in any state in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such state.
# # #
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