<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THAT A FINAL PROSPECTUS SUPPLEMENT
HAS BEEN DELIVERED. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
PROSPECTUS SUPPLEMENT
To Prospectus dated February 1, 1996
SUBJECT TO COMPLETION--DATED JULY 17, 1996
CRIIMI MAE Inc.
2,000,000 Shares
__% Series B Cumulative Convertible Preferred Stock
(Liquidation Preference of $25.00 per share)
CRIIMI MAE Inc. ("CRIIMI MAE") is a full service commercial mortgage
company structured as a self-administered real estate investment trust ("REIT").
CRIIMI MAE is offering hereby up to 2,000,000 shares of its Series B Cumulative
Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred
Shares"). The liquidation preference per Series B Preferred Share is $25.00.
Dividends on the Series B Preferred Shares will be cumulative from the date
of original issuance and will be payable quarterly on the last business day in
March, June, September and December of each year in an amount equal to the sum
of (i) $___ per share per quarter (equal to $___ per annum) plus (ii) the
product of (x) the excess over $0.30, if any, of the quarterly cash dividend
declared or paid in respect of each share of shares of common stock of CRIIMI
MAE, par value $.01 per share (the "Common Shares"), for the applicable quarter,
(y) ___ (the "Conversion Ratio") and (z) one plus a conversion premium of 5%
(the "Conversion Premium"), subject to adjustment upon the occurrence of certain
events. The Series B Preferred Shares are convertible at the option of the
holder at any time into Common Shares at a conversion price of $____ per Common
Share, subject to adjustment upon the occurrence of certain events. The Series
B Preferred Shares will not be redeemable by CRIIMI MAE prior to the tenth
anniversary of this offering; after which date the Series B Preferred Shares may
be redeemed, at the option of CRIIMI MAE, in whole or in part, on any quarterly
dividend payment date, at a redemption price of $25.00 per share, plus in each
case accrued and unpaid dividends, if any, to the redemption date. The Series B
Preferred Shares have no stated maturity and will not be entitled to the benefit
of any sinking fund. The Series B Preferred Shares shall rank pari passu with
CRIIMI MAE's Series A Cumulative Convertible Preferred Stock with respect to
dividend rights and rights upon liquidation, dissolution or winding up of CRIIMI
MAE. See "Recent Developments."
The Series B Preferred Shares have been submitted for approval for listing
on the New York Stock Exchange ("NYSE") under the symbol "CMM-PrB." CRIIMI
MAE's Common Shares are listed on the NYSE under the symbol "CMM." The reported
last sale price of the Common Shares as reported on the NYSE Composite Tape on
July 16, 1996, was $10.50 per share.
------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------------------
The Underwriters have severally agreed to purchase from CRIIMI MAE the
Series B Preferred Shares offered hereby for an aggregate price of $ .
In addition, CRIIMI MAE has granted to the Underwriters an option, exercisable
for 30 days from the date of this Prospectus Supplement, to purchase up to
300,000 additional Series B Preferred Shares for an aggregate price of $
. The Series B Preferred Shares offered hereby may be offered by the
Underwriters from time to time in one or more transactions at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. In addition, the Underwriters may convert the
Series B Preferred Shares offered hereby and may sell the Common Shares issuable
upon such conversion from time to time in one or more transactions on the NYSE
or otherwise, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, or at negotiated prices. CRIIMI MAE has
agreed to indemnify the Underwriters against certain liabilities, including
certain liabilities under the Securities Act of 1933. See "Underwriting."
------------------------------------
The Series B Preferred Shares are offered by the Underwriters, subject to
delivery by CRIIMI MAE and acceptance by the Underwriters, to prior sale and to
withdrawal. It is expected that the delivery of the Series B Preferred Shares
will be made against payment therefor on or about August , 1996.
Friedman, Billings, Ramsey & Co., Inc. BT Securities Corporation
The date of this Prospectus Supplement is , 1996
<PAGE>
CRIIMI MAE
CRIIMI MAE, a full service commercial mortgage company structured as a
self-administered real estate investment trust ("REIT"), 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 mortgage loan
securitizations ("Subordinated CMBSs"), using a combination of debt and
equity. CRIIMI MAE's principal objectives are to provide increasing
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 three areas: building a quality portfolio,
efficient financing of its investments, and active portfolio management
and mortgage servicing.
RECENT DEVELOPMENTS
On July 1, 1996, CRIIMI MAE issued 75,000 shares of Series A Cumulative
Convertible Preferred Stock of the Company, $.01 par value per share (the
"Series A Preferred Shares"), at an aggregate price of $7,500,000. The
Series A Preferred Shares pay a dividend based on a fixed premium over
three-month LIBOR (the London Interbank Offered Rates) and, subject to the
terms of CRIIMI MAE's Articles of Incorporation, as amended and
supplemented (the "Articles"), are (i) convertible at the option of the
holders, (ii) subject to mandatory conversion by CRIIMI MAE and (iii)
subject to redemption by CRIIMI MAE. The liquidation preference and the
redemption price on the Series A Preferred Shares equals $100 per share,
together with accrued but unpaid dividends. The Series A Preferred Shares
were purchased by a single European institutional investor. The Company
also acquired a put option to sell up to an additional 75,000 Series A
Preferred Shares, at a price of $100 per share, to such investor at any
time prior to July 1, 1997.
USE OF PROCEEDS
CRIIMI MAE intends to use the net proceeds from the sale of the Series B
Preferred Shares offered hereby (i) to acquire mortgage investments,
including Subordinated CMBSs, (ii) to sponsor and/or participate in
collateralized mortgage obligation programs, and (iii) for other general
corporate purposes, including working capital. Pending their use for the
foregoing purposes, the net proceeds are expected to be invested in short-
term, interest-bearing accounts.
PRICE RANGE OF COMMON SHARES AND DIVIDENDS
The Common Shares are traded on the NYSE under the symbol "CMM." The
table below sets forth the high and the low closing sales prices per
Common Share as reported on the NYSE Composite Tape and the amount of cash
dividends paid per Common Share during the periods indicated. As of July
16, 1996, there were approximately 25,000 holders of record of Common
Shares.
<TABLE>
<CAPTION>
Price Range of Dividends
Common Shares Paid Per
--------------
High Low Common Share
<S> <C> <C> <C>
Year Ended December 31, 1994:
1st Quarter $12 $ 9 3/8 $ 0.29
2nd Quarter 11 1/8 9 3/4 0.29
3rd Quarter 11 1/4 9 3/8 0.29
4th Quarter 9 1/2 6 5/8 0.29
------
$1.16
Year Ended December 31, 1995:
1st Quarter 8 3/8 6 3/4 $0.225
2nd Quarter 8 3/4 7 1/8 0.225
3rd Quarter 8 1/2 7 3/4 0.235
4th Quarter 9 1/4 8 1/8 0.235
------
$0.92
Year Ended December 31, 1996:
1st Quarter 10 1/2 8 5/8 $0.30
2nd Quarter 11 10 0.30
3rd Quarter (through July 16, 1996) 11 10 3/8 --
</TABLE>
The reported last sales price of the Common Shares as reported on the
NYSE Composite Tape on July 16, 1996 was $10.50 per share.
S-1
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth CRIIMI MAE's consolidated ratios of
earnings to fixed charges for the periods shown:
<TABLE>
<CAPTION>
Years Ended December 31, Three Months
Ended March 31,
- ------------------------------ ----------
1991 1992 1993 1994 1995 1995 1996
- ------------------------------ ----------
<S> <C> <C> <C> <C> <C> <C>
1.61 1.69 1.48 1.66 1.35 1.40 1.74
- ------------------------------ ----------
</TABLE>
The ratios of earnings to fixed charges were computed by dividing
earnings, as defined below, by fixed charges. For this purpose, earnings
consist of CRIIMI MAE's consolidated net income (including any derived
from the ownership of Common Stock of CRI Liquidating REIT, Inc), plus
fixed charges, extraordinary items and loss from investment in limited
partnerships. Fixed charges consist of gross interest expense including
amortization of debt expense, discount or premium. As of the periods
presented, CRIIMI MAE had not issued any shares of preferred stock;
therefore, the ratios of earnings to combined fixed charges and preferred
share dividends are unchanged from the ratios presented in this section.
DESCRIPTION OF SERIES B PREFERRED SHARES
CRIIMI MAE is authorized to issue (i) 60 million Common Shares, of which
amount 30,400,983 were issued and outstanding as of July 16, 1996, and
(ii) 25 million shares of preferred stock, par value $.01 per share
("Preferred Stock"). Prior to this offering, the Board of Directors of
CRIIMI MAE (the "Board") had authorized the issuance of up to 150,000
Series A Preferred Shares, of which amount 75,000 were issued and
outstanding as of July 16, 1996. Pursuant to this offering, the Board has
authorized the issuance of up to 3,000,000 Series B Preferred Shares. No
other shares of Preferred Stock of CRIIMI MAE are outstanding as of the
date hereof.
The following description of the Series B Preferred Shares sets forth
certain general terms and provisions of the Series B Preferred Shares. The
statements below describing the Series B Preferred Shares are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of CRIIMI MAE's Articles and the Articles
Supplementary to the Articles relating to the Series B Preferred Shares
(the "Articles Supplementary").
Designation and Number
The number of shares initially constituting the Series B Preferred
Shares shall be 3,000,000 (of which up to 2,300,000 are offered hereby),
which number may be decreased (but not increased) by the Board without a
vote of holders of Series B Preferred Shares; provided, however, that such
number may not be decreased below the number of then outstanding Series B
Preferred Shares.
Rank
The Series B Preferred Shares will, with respect to dividend rights and
rights upon liquidation, dissolution or winding up of CRIIMI MAE, rank (i)
senior to the Common Shares and to all equity securities issued by CRIIMI
MAE the terms of which specifically provide that such equity securities
rank junior to the Series B Preferred Shares with respect to dividend
rights or rights upon liquidation, dissolution or winding up of CRIIMI
MAE; (ii) on a parity with the Series A Preferred Shares and all other
equity securities issued by CRIIMI MAE the terms of which specifically
provide that such equity securities rank on a parity with the Series B
Preferred Shares with respect to dividend rights or rights upon
liquidation, dissolution or winding up of CRIIMI MAE; and (iii) junior to
all equity securities issued by CRIIMI MAE the terms of which specifically
provide that such equity securities rank senior to the Series B Preferred
Shares with respect to dividend rights or rights upon liquidation,
dissolution or winding up of CRIIMI MAE.
S-2
<PAGE>
Dividends
Subject to the preferential rights of any equity securities of CRIIMI
MAE ranking senior as to dividends to the Series B Preferred Shares and
the provisions of CRIIMI MAE's Articles regarding Excess Shares (as
defined in the Articles), holders of the Series B Preferred Shares will be
entitled to receive, when and as declared by the Board, out of funds
legally available for the payment of dividends, cumulative preferential
cash dividends in an amount per Series B Preferred Share equal to the sum
of (i) $___ per share per quarter (equal to $___ per annum) plus (ii) the
product of (x) the excess over $0.30 (the "Base Common Dividend Rate"), if
any, of the quarterly cash dividend declared or paid in respect of each
Common Share for the applicable quarter, (y) the Conversion Ratio and (z)
one plus the Conversion Premium. In the event of any adjustment to the
Conversion Price pursuant to any Adjustment Event (as defined below)
specified in clauses (i) and (ii) thereunder, the Base Common Dividend
Rate will be adjusted in the same proportion as such adjustment in the
Conversion Price.
Dividends with respect to the Series B Preferred Shares will be
cumulative from the date of original issuance and will be payable
quarterly in arrears on the last business day in March, June, September
and December (on the same dates as dividends on Common Shares are payable)
(each, a "Quarterly Dividend Payment Date"). Dividends payable on the
Series B Preferred Shares with respect to any partial dividend period
(other than the period corresponding to the initial Quarterly Dividend
Payment Date on September 30, 1996, for which each Series B Preferred
Share shall receive a full quarterly dividend payment) shall be computed
on the basis of a 360-day year of twelve 30-day months. Dividends will be
payable to holders of record as they appear in the stock records of CRIIMI
MAE at the close of business on the applicable record date set by the
Board. No interest shall be payable with respect to any dividend payment
on the Series B Preferred Shares that may be in arrears.
No dividends will be declared or paid or set apart for payment (other
than in Common Shares or other capital stock ranking junior to the Series
B Preferred Shares as to dividends and upon liquidation) on any class or
series of capital stock ranking, as to dividends, junior to the Series B
Preferred Shares for any period 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 Shares for all past dividend periods and the then
current dividend period. No full dividends shall be paid or declared and
set apart for payment (other than in Common Shares or other capital stock
ranking junior to the Series B Preferred Shares as to dividends and upon
liquidation) on any class or series of capital stock ranking, as to
dividends, on a parity with the Series B Preferred Shares 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 Shares for
all dividend payment periods terminating on or prior to the date of
payment of such full cumulative dividends. Notwithstanding the foregoing,
dividends on the Series B Preferred Shares will accrue whether or not
CRIIMI MAE has earnings, whether or not there are funds legally available
for the payment of such dividends and whether or not such dividends are
declared. Holders of Series B Preferred Shares will not be entitled to
any dividends in excess of full cumulative dividends as described above.
When dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Series B Preferred Shares and the
shares of any other class or series of capital stock ranking on a parity
as to dividends with the Series B Preferred Shares, all dividends declared
upon the Series B Preferred Shares and any other series of capital stock
ranking on a parity as to dividends with the Series B Preferred Shares
(including the Series A Preferred Shares) shall be declared pro rata so
that the amount of dividends declared per Series B Preferred Share and
such other series of capital stock shall in all cases bear to each other
the same ratio that accrued dividends per Series B Preferred Share and
such other series of capital stock bear to each other.
Unless full cumulative dividends on the Series B Preferred Shares have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment on the Series B
Preferred Shares for all past dividend periods and the then current
dividend period, CRIIMI MAE may not redeem, purchase or otherwise acquire
for any consideration (or pay to or make available money for a sinking
fund for the redemption of) any Common Shares, or any other capital stock
of CRIIMI MAE ranking junior to or on a parity with the Series B Preferred
Shares as to dividends or upon liquidation, dissolution or winding
S-3
<PAGE>
up (except by conversion into, or exchange for other capital stock of
CRIIMI MAE ranking junior to the Series B Preferred Shares as to dividends
and upon liquidation, dissolution or winding up). Notwithstanding the
foregoing, CRIIMI MAE shall not be restricted from purchasing or acquiring
any capital stock of CRIIMI MAE either (i) to preserve the status of
CRIIMI MAE as a REIT or (ii) pursuant to a purchase or exchange offer made
on comparable terms to all holders of outstanding shares of capital stock
of CRIIMI MAE.
Any dividend payment made on Series B Preferred Shares shall first be
credited against the earliest accrued but unpaid dividend due which
remains payable.
Redemption
From and after the tenth anniversary of the date of issuance of the
Series B Preferred Shares, the Series B Preferred Shares will be subject
to redemption at the option of CRIIMI MAE, in whole or in part, on any
Quarterly Dividend Payment Date, for cash equal to $25.00 per share,
together in each case with an amount equal to accrued and unpaid dividends
on such Series B Preferred Shares to (and including) the date fixed for
redemption. If fewer than all of the outstanding Series B Preferred
Shares are to be redeemed, the number of shares to be redeemed will be
determined by CRIIMI MAE and such shares shall be redeemed pro rata from
the holders of record of such shares in proportion to the number of such
shares held by such holders.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of record of Series B
Preferred Shares to be redeemed at the address shown on the share transfer
books of CRIIMI MAE. Each notice shall state: (i) the redemption date;
(ii) the number of Series B Preferred Shares to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such
Series B Preferred Shares are to be surrendered for payment of the
redemption price; (v) that dividends on the shares to be redeemed will
cease to accrue on such redemption date; and (vi) the date upon which the
conversion rights of the holders of Series B Preferred Shares shall
terminate. If notice of redemption of any Series B Preferred Shares has
been given and if the funds necessary for such redemption have been paid
or set aside by CRIIMI MAE in trust for the benefit of the holders of any
Series B Preferred Shares so called for redemption, then from and after
the redemption date dividends will cease to accrue on such Series B
Preferred Shares, such Series B Preferred Shares shall no longer be deemed
outstanding and all rights of the holders of such shares will terminate,
except the right to receive the redemption price. Any moneys so set aside
in trust which remain unclaimed by the holders of the Series B Preferred
Shares at the end of two years after the redemption date will be returned
by the trustee thereof to CRIIMI MAE and the holders of such Series B
Preferred Shares will be entitled to look only to CRIIMI MAE for the
payment thereof.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of CRIIMI MAE, then, before any distribution or payment
shall be made to the holders of any Common Shares or any other class or
series of capital stock of CRIIMI MAE ranking junior to the Series B
Preferred Shares in the distribution of assets upon any liquidation,
dissolution or winding up of CRIIMI MAE, the holders of Series B Preferred
Shares shall be entitled to receive out of assets of CRIIMI MAE legally
available for distribution to stockholders, liquidating distributions in
the amount of $25.00 per share, plus an amount equal to all dividends
accrued and unpaid thereon. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of
Series B Preferred Shares will have no right or claim to any of the
remaining assets of CRIIMI MAE. In the event that, upon any such voluntary
or involuntary liquidation, dissolution or winding up, the available
assets of CRIIMI MAE are insufficient to pay the amount of the liquidating
distributions on all outstanding Series B Preferred Shares and the
corresponding amounts payable on all shares of other classes or series of
capital stock of CRIIMI MAE ranking on a parity with the Series B
Preferred Shares in the distribution of assets upon liquidation,
dissolution or winding up, then the holders of the Series B Preferred
Shares 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.
If liquidating distributions shall have been made in full to all holders
of Series B Preferred Shares, the remaining assets of CRIIMI MAE shall be
distributed among the holders of any other classes or series of capital
S-4
<PAGE>
stock ranking junior to the Series B Preferred Shares upon liquidation,
dissolution or winding up, according to their respective rights and
preferences and in each case according to their respective number of
shares. For such purposes, the consolidation, merger or other business
combination of CRIIMI MAE with or into any other corporation, trust or
entity, or the sale, lease or conveyance of all or substantially all of
the property or business of CRIIMI MAE, shall not be deemed to constitute
a liquidation, dissolution or winding up of CRIIMI MAE.
Voting Rights
Holders of the Series B Preferred Shares will not have any voting
rights, except as set forth in the Articles Supplementary and summarized
below, or as otherwise from time to time required by law.
So long as any Series B Preferred Shares remain outstanding, CRIIMI MAE
will not, without the affirmative vote or consent, given in person or by
proxy, either in writing or at a meeting (such series voting separately as
a class), of the holders of at least: (i) two-thirds of the Series B
Preferred Shares outstanding at the time, authorize or create, or increase
the authorized or issued amount of, any class or series of capital stock
ranking prior to the Series B Preferred Shares with respect to payment of
dividends or the distribution of assets upon liquidation, dissolution or
winding up or reclassify any authorized capital stock of CRIIMI MAE into
any such shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such shares; (ii)
a majority of the Series B Preferred Shares outstanding at the time,
authorize or create, or increase the authorized or issued amount of, any
class or series of capital stock ranking on a parity with the Series B
Preferred Shares with respect to payment of dividends or the distribution
of assets upon liquidation, dissolution or winding up or reclassify any
authorized capital stock of CRIIMI MAE into any such shares, or create,
authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (iii) two-thirds of
the Series B Preferred Shares outstanding at the time, amend, alter or
repeal the provisions of the Articles or the Articles Supplementary,
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 Shares or the holders thereof; provided,
however, with respect to the occurrence of any of the Events set forth in
(iii) above, so long as the Series B Preferred Shares remain 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 Series B Preferred
Shares, and provided further that (x) any increase in the amount of the
authorized Common Shares 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
Shares with respect to 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.
During any period in which dividends on the Series B Preferred Shares
are cumulatively in arrears for not less than six quarterly dividend
payments (whether or not consecutive), then the number of directors
constituting the Board shall, without further action, be increased by two
and the holders of the Series B Preferred Shares 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 CRIIMI MAE to fill
such newly created directorships. Such additional voting rights shall
continue until such time as all dividends accumulated on the Series B
Preferred Shares 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 Shares shall terminate
subject to revesting in the event of each and every subsequent event of
the character indicated above.
Conversion
Subject to the exceptions described under "--Restrictions on Ownership
and Transfer," holders of the Series B Preferred Shares will have the
right, except in the case of Series B Preferred Shares called for
redemption, to convert all or any of the Series B Preferred Shares into
Common Shares at the conversion price of $____ per Common Share, subject
to adjustment upon the occurrence of certain events, as described below
(the "Conversion Price"). The number of Common Shares into which a Series
B Preferred Share shall be convertible shall be determined by dividing
$25.00 by the Conversion Price. In the case of Series B Preferred
S-5
<PAGE>
Shares called for redemption, conversion rights will expire at the close
of business on the fifth business day immediately preceding the date fixed
for redemption.
Series B Preferred Shares will be deemed to have been converted
immediately prior to the close of business on the date such shares are
surrendered for conversion and notice of election to convert the same is
received by CRIIMI MAE. No adjustment or prepayment for accrued dividends
on the Series B Preferred Shares is to be made upon conversions thereof
made prior to the close of business on the record date applicable to a
Quarterly Dividend Payment Date (a "Quarterly Dividend Record Date").
However, if any holder surrenders Series B Preferred Shares for conversion
after the close of business on such Quarterly Dividend Record Date and
prior to the opening of business on the related Quarterly Dividend Payment
Date, then, notwithstanding such conversion, the dividend payable in
respect of such the Series B Preferred Shares on such Quarterly Dividend
Payment Date will be paid to the registered holder of such Series B
Preferred Shares on such Quarterly Dividend Record Date. No fractional
Common Shares will be issued upon conversion and, if the conversion
results in a fractional interest, an amount will be paid in cash equal to
the value of such fractional interest based on the market price of the
Common Shares on the last trading day prior to the date of conversion.
The number of Common Shares or other assets issuable upon conversion and
the Conversion Price are subject to adjustment upon the occurrence of the
following events ("Adjustment Events"):
(i) the issuance of Common Shares as a dividend or distribution on
Common Shares (other than Common Shares issued pursuant to CRIIMI
MAE's dividend reinvestment plan);
(ii) the subdivision, combination or reclassification of the
outstanding Common Shares;
(iii) the issuance to all holders of Common Shares of rights or warrants
to subscribe for or purchase Common Shares (or securities
convertible into Common Shares) at a price per share less than the
then current market price per share;
(iv) the distribution to all holders of Common Shares of evidences of
indebtedness or assets (including securities, but excluding (x)
cash dividends payable solely in cash that may from time to time be
fixed by the Board, (y) dividends or distributions in connection
with the liquidation, dissolution or winding up of CRIIMI MAE, and
(z) those dividends, distributions, rights or warrants referred to
in clause (iii) above); and
(v) the distribution to all holders of Common Shares of rights or
warrants to subscribe for securities (other than those referred to
in clause (iii) above).
The adjustments to be made in each such event are set forth in the
Articles Supplementary. In the event of a distribution of evidence of
indebtedness or other assets (as described in clause (iv) above) or a
dividend to all holders of Common Shares of rights to subscribe for
additional shares of CRIIMI MAE's capital stock (other than those referred
to in clause (iii) above), CRIIMI MAE may, instead of making an adjustment
of the Conversion Price, make prior provision so that each holder who
converts such Series B Preferred Shares will be entitled to receive upon
such conversion, in addition to Common Shares, an appropriate number of
such rights, warrants, evidences of indebtedness or other assets. No
adjustment of the Conversion Price will be made until cumulative
adjustments amount to one percent or more of the Conversion Price as last
adjusted. Any adjustments not so required to be made will be carried
forward and taken into account in subsequent adjustments.
Whenever the number of Common Shares or other assets issuable upon
conversion and the Conversion Price are adjusted as herein provided,
CRIIMI MAE (i) will promptly make available at the office of the transfer
agent a statement describing in reasonable detail such adjustment, and
(ii) will cause to be mailed by first class mail, postage prepaid, as soon
as practicable, to each holder of record of Series B Preferred Shares, a
notice stating that certain adjustments have been made and stating the
adjusted Conversion Price.
S-6
<PAGE>
In the event any capital reorganization or reclassification of the
capital stock of CRIIMI MAE, or consolidation or merger of CRIIMI MAE with
another corporation, or the sale, transfer or lease of all or
substantially all of its assets to another corporation, is effected in
such a way that holders of Common Shares will be entitled to receive
stock, securities or other assets with respect to or in exchange for
Common Shares, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or lease, the
holders of Series B Preferred Shares shall have the right to convert such
shares into the kind and amount of stock, securities or other assets which
the holders of such shares would have owned or been entitled to receive
immediately after the transaction if such holders had converted such
shares immediately before the effective date of the transaction, subject
to further adjustment upon the occurrence of the events described above.
Restrictions on Ownership and Transfer
As discussed in the Registration Statement under "--Common Shares--
Restrictions on Ownership and Transfer," for CRIIMI MAE to qualify as a
REIT under the Internal Revenue Code of 1986, as amended (the "Code"), not
more than 50% in value of its outstanding capital stock may be owned,
directly or constructively, by five or fewer individuals (as defined in
the Code to include certain entities) during the last half of a taxable
year. To assist CRIIMI MAE in meeting this requirement, CRIIMI MAE may
take certain actions to limit the beneficial ownership, directly or
indirectly, by a single person of more than 9.8% of CRIIMI MAE's
outstanding capital stock, including any Series B Preferred Shares.
CERTAIN UNITED STATES TAX CONSIDERATIONS
The following general discussion is a summary of certain U.S. federal
income and estate tax consequences of the ownership and disposition of the
Series B Preferred Shares, or the Common Shares into which such Series B
Preferred Shares are convertible (hereinafter collectively referred to as
"Capital Shares"), applicable to holders of such Capital Shares who
acquire and own such Capital Shares as capital assets within the meaning
of Section 1221 of the Code. For purposes of this discussion, a "Non-U.S.
Holder" is a person other than (i) a citizen or resident of the United
States, (ii) a corporation or partnership created or organized in the
United States or under the laws of the United States or of any state, or
(iii) an estate or trust whose income is includable in gross income for
United States federal income tax purposes regardless of its source. For
purposes of the withholding tax on dividends discussed below, a non-
resident fiduciary of an estate or trust will be considered a Non-U.S.
Holder.
This discussion does not consider specific facts and circumstances that
may be relevant to a particular holder's tax position (including the fact
that, in the case of a Non-U.S. Holder that is a partnership, the U.S. tax
consequences of holding and disposing of Capital Shares may be affected by
certain determinations made at the partner level), and does not consider
U.S. state and local or non-U.S. tax consequences. Furthermore, the
following discussion is based on provisions of the Code and administrative
and judicial interpretations, all of which are subject to change, possibly
on a retroactive basis. Each prospective holder of Capital Shares is urged
to consult a tax advisor with respect to the U.S. federal tax consequences
of holding and disposing of the Capital Shares, as well as any tax
consequences that may arise under the laws of any U.S. state, local or
other U.S. or non-U.S. taxing jurisdiction.
General Considerations
CRIIMI MAE and its subsidiary, CRI Liquidating REIT, Inc. ("CRI
Liquidating"), have qualified, and intend to continue to qualify, as REITs
under the Code. Qualification for treatment as a REIT requires CRIIMI MAE
and CRI Liquidating each to meet certain criteria including certain
requirements regarding the nature of its ownership, assets, income and
distributions of taxable income. A REIT generally is not subject to
federal income tax on that portion of its ordinary income or capital gains
that is distributed currently to stockholders. CRIIMI MAE and CRI
Liquidating have historically distributed substantially all of their
taxable income to stockholders. CRIIMI MAE and CRI Liquidating intend to
continue to distribute a level of taxable income necessary to qualify as
REITs. CRIIMI MAE and CRI Liquidating will each generally be subject to
federal income tax at normal corporate rates on its undistributed income
and to a 4% excise tax under the Code on the amount, if any, by which 85%
of its REIT taxable income (including accrued but unpaid interest income)
and
S-7
<PAGE>
95% of any net capital gain exceed the amount actually distributed to its
stockholders during the year (or declared as a dividend during October,
November or December of a calendar year, if distributed during the
following January as ordinary income dividends). Accrued income for each
quarter is generally received within 30 days after the end of the quarter.
CRIIMI MAE and CRI Liquidating are not aware of any present circumstances
that would cause them to fail to qualify as REITs, nor do they anticipate
any such circumstances in the reasonably foreseeable future. If the U.S.
Internal Revenue Service ("IRS") successfully challenged the tax status of
CRIIMI MAE or CRI Liquidating as a REIT, CRIIMI MAE and CRI Liquidating's
earnings would become subject to federal income tax (including any
applicable minimum tax) at corporate rates.
To protect CRIIMI MAE's qualification as a REIT under the Code, the
Articles provide that no person or persons acting as a group (defined to
include partnerships, corporations, trusts and other entities), with the
exceptions of C.R.I., Inc. or its affiliates, shall at any time directly
or indirectly acquire ownership of more than 9.8% of the outstanding
capital stock of CRIIMI MAE.
Taxation of Taxable Domestic Stockholders
As long as CRIIMI MAE qualifies as a REIT, distributions made to CRIIMI
MAE's taxable domestic stockholders out of current or accumulated earnings
and profits, as determined for federal income tax purposes, and not
designated as capital gain dividends, will be taken into account by such
stockholders as ordinary income and will not be eligible for the dividends
received deduction for stockholders that are corporations. Distributions
that are designated by CRIIMI MAE as capital gain dividends will be taxed
as long-term capital gains (to the extent that they do not exceed CRIIMI
MAE's actual net capital gain for the taxable year) without regard to the
period for which the stockholder has held its Capital Shares. However,
corporate stockholders are required to treat capital gain dividends as a
preference item for alternative minimum tax ("AMT") purposes and could be
subject to AMT at a rate of 20% on such gains. To the extent that CRIIMI
MAE makes distributions in excess of current and accumulated earnings and
profits as determined for federal income tax purposes, these distributions
are treated first as a tax-free return of capital to the stockholder,
reducing the tax basis of a stockholder's Capital Shares by the amount of
such distribution (but not below zero), with distributions in excess of
the stockholder's tax basis taxable as gain from the sale or exchange of
Capital Shares. In addition, any dividend declared by CRIIMI MAE in
October, November or December of any year and payable to a stockholder of
record on a specific date in any such month shall be treated as both paid
by CRIIMI MAE and received by the stockholder on December 31 of such year,
provided that the dividend is actually paid by CRIIMI MAE during January
of the following calendar year. Stockholders may not include in their
individual income tax returns any net operating losses or capital losses
of CRIIMI MAE.
Because CRIIMI MAE has more than one class of stock outstanding, it must
allocate available earnings and profits between distributions to the
different classes of stock on the basis of the dividend preferences
established by local law and under its governing instruments.
CRIIMI MAE currently intends to issue debt instruments which might be
considered taxable mortgage pools ("TMPs") under Section 7701(i) of the
Code. If CRIIMI MAE issues TMPs, some portion of the ordinary or capital
gain dividends received by a stockholder may be considered excess
inclusions. If a portion of the ordinary or capital gain dividends
received by a stockholder from CRIIMI MAE is designated as excess
inclusion, the taxable income of that stockholder shall in no event be
less than its allocable excess inclusion, regardless of its other items of
income or deduction. CRIIMI MAE does not anticipate that a significant
portion of its ordinary and capital gain dividends will consist of excess
inclusion.
In general, any loss upon a sale or exchange of Capital Shares by a
stockholder who has held such Capital Shares for six months or less (after
applying certain holding period rules) will be treated as a long-term
capital loss, to the extent of distributions from CRIIMI MAE required to
be treated by such shareholder as long-term capital gains.
Section 305(c) of the Code and the Treasury regulations thereunder treat
as a dividend certain constructive distributions of stock with respect to
preferred stock. Certain adjustments to the Conversion Price of the
Series B Preferred Shares may be treated as dividends to holders of such
shares. Conversely, the failure
S-8
<PAGE>
to make certain adjustments to the Conversion Price to reflect certain
events may result in a taxable dividend to other stockholders.
Taxation of Non-U.S. Holders
In general, distributions to a Non-U.S. Holder of Capital Shares which
are not attributable to gain from the sale or exchange of United States
real property interests and are not designated by CRIIMI MAE as capital
gain dividends will be treated as dividends of ordinary income (to the
extent of earnings and profits for U.S. federal income tax purposes). Such
distributions ordinarily will be subject to withholding of U.S. federal
income tax at a 30% rate, unless such rate is reduced by an applicable
income tax treaty. Dividends that are effectively connected with such
holder's conduct of a trade or business in the United States or, to the
extent a tax treaty applies, attributable to a permanent establishment in
the United States ("U.S. trade or business income") generally are subject
to U.S. federal income tax at regular rates (and, in the case of a Non-
U.S. Holder that is a corporation, under certain circumstances may be
subject to an additional "branch profits tax" at a 30% rate or such lower
rate as may be applicable under an income tax treaty), but are not
generally subject to the 30% withholding tax if the Non-U.S. Holder
provides CRIIMI MAE in a timely manner with either (i) an IRS Form 1001
stating that the Non-U.S. Holder is entitled to a reduced rate of tax or
exempt from withholding tax under an applicable treaty, or (ii) if such
distributions are "effectively connected" income, an IRS Form 4224.
A Non-U.S. Holder that is required to submit a certification on Form
1001 or 4224 to avoid or reduce the imposition of United States federal
withholding tax with respect to a dividend on Capital Shares is required
to submit such certification to CRIIMI MAE as soon as practicable after
the Non-U.S. Holder acquires such shares or a beneficial interest therein.
If CRIIMI MAE does not physically receive such certification by the date
that is 10 days prior to a dividend payment date, CRIIMI MAE may treat
such certification as ineffective with respect to any payment to such Non-
U.S. Holder and may withhold tax from such payment on such date. The Non-
U.S. Holder will be responsible for ensuring that all IRS Forms are
properly updated. If an IRS form provided by a Non-U.S. Holder is not
properly updated, CRIIMI MAE will commence withholding on the dividend
payment date on or following the date that such form becomes no longer
current.
Distributions by CRIIMI MAE which are not dividends out of earnings and
profits (as determined for U.S. federal income tax purposes) should not be
subject to U.S. withholding tax. Such distributions are treated first as a
tax-free return of capital to the Non-U.S. Holder, reducing the tax basis
of the Non-U.S. Holder's Capital Shares by the amount of such distribution
(but not below zero), with distributions in excess of the Non-U.S.
Holder's tax basis taxable (to the same extent described below) as a sale
or exchange of Capital Shares. If it cannot be determined at the time a
distribution is made whether or not such distribution will be in excess of
current and accumulated earnings and profits, the entire amount of the
distribution will be subject to withholding at the rate applicable to
dividends. However, the Non-U.S. Holder may seek a refund of such amounts
from the IRS if it is subsequently determined that such distribution was,
in fact, in excess of current and accumulated earnings and profits of
CRIIMI MAE. CRIIMI MAE does not expect to pay dividends in excess of
current and accumulated earnings and profits. If any portion of the
ordinary or capital gains dividends received by a foreign stockholder from
CRIIMI MAE is designated as excess inclusion (as determined for U.S.
federal income tax purposes), (i) the withholding rate on such portion of
the distribution is not reduced by any applicable treaty, and (ii) if the
dividend is U.S. trade or business income, the U.S. trade or business
income of such holder shall in no event be less than its taxable excess
allocation, regardless of its other items of income or deduction. CRIIMI
MAE does not anticipate that a significant portion of its ordinary and
capital gains dividends will consist of excess inclusion.
Under the Foreign Investment in Real Property Tax Act of 1980
("FIRPTA"), for as long as CRIIMI MAE qualifies as a REIT, a distribution
made by CRIIMI MAE to a Non-U.S. Holder that is attributable to gains from
the sale or exchange of U.S. real property interests generally will be
taxable as U.S. trade or business income. Therefore, Non-U.S. Holders
generally will be taxed at the capital gain rates applicable to U.S.
Holders (subject to applicable alternative minimum tax and a special
alternative minimum tax in the case of nonresident alien individuals).
Distributions subject to FIRPTA also may be subject to a 30% branch
profits tax in the hands of a corporate Non-U.S. Holder (unless reduced or
eliminated by treaty). In addition, CRIIMI MAE will be required to
withhold U.S. tax equal to 35% of the amount of dividends that could have
been
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<PAGE>
designated as capital gain dividends, but such requirement apparently is
limited to the amount of such gain that is attributable to the sale or
exchange of U.S. real property interests. The amount so withheld is
creditable against the U.S. federal income tax liability of such Non-U.S.
Holder and a refund may be available if the amount withheld exceeds the
U.S. federal income tax liability of the Non-U.S. Holder. CRIIMI MAE does
not expect to realize any capital gains from CRI Liquidating's investments
in participating mortgage investments. CRIIMI MAE does not foresee that
any gains on its mortgage investments would be subject to FIRPTA (provided
CRIIMI MAE does not foreclose upon such mortgage investments) because such
mortgages merely secure a debt and CRIIMI MAE will not be entitled to a
direct or indirect right to share in the appreciation in the value of, or
in the gross or net proceeds or profits generated by, the underlying real
property.
If CRIIMI MAE is a "domestically controlled REIT," a sale of Capital
Shares by a Non-U.S. Holder generally will not be subject to U.S. taxation
under FIRPTA. A REIT is a domestically controlled REIT if, at all times
during a specified testing period, less than 50% in value of its shares is
held directly or indirectly by Non-U.S. Holders. CRIIMI MAE is currently,
and anticipates continuing to be, a domestically controlled REIT.
Therefore, it anticipates that a Non-U.S. Holder's sale of Capital Shares
will not be subject to taxation under FIRPTA. Because the Capital Shares
will be publicly traded, however, no assurance can be given that CRIIMI
MAE will continue to be a domestically controlled REIT.
If CRIIMI MAE does not constitute a domestically controlled REIT, a Non-
U.S. Holder's sale of Capital Shares nevertheless generally will not be
subject to tax under FIRPTA provided that either (i) CRIIMI MAE is not a
"United States real property holding corporation" (which is defined in the
Code generally as any corporation if the net fair market value of its U.S.
real property interests accounts for 50% or more of the net fair market
value of its assets at any time during the 5-year period prior to such
sale), or (ii) the shares are "regularly traded" (as defined by applicable
Treasury regulations) on an established securities market (e.g., the
NYSE), and the selling Non-U.S. Holder held 5% or less of CRIIMI MAE's
outstanding shares at all times during a specified testing period.
If gain on the sale of the Capital Shares by a Non-U.S. Holder is
subject to taxation under FIRPTA, the income would be taxable as U.S.
trade or business income (subject to applicable alternative minimum tax
and a special alternative minimum tax in the case of nonresident alien
individuals). Even if FIRPTA does not apply to the sale of the Capital
Shares, a Non-U.S. Holder that owns the Capital Shares as a capital asset
nonetheless will be subject to U.S. federal income tax on any gain
realized on the sale of Capital Shares if (i) such gain is U.S. trade or
business income, (ii) in the case of gain realized by an individual Non-
U.S. Holder, such Non-U.S. Holder is present in the United States for 183
days or more during the year of such sale and certain other conditions are
met, or (iii) the Non-U.S. Holder is taxed under rules applicable to
certain U.S. expatriates.
In general, an individual who is a Non-U.S. Holder for U.S. estate tax
purposes will incur liability for U.S. federal estate tax if the fair
market value of the property included in such individual's taxable estate
for U.S. federal estate tax purposes exceeds the statutory threshold
amount. For these purposes, Capital Shares owned or treated as owned by an
individual who is a Non-U.S. Holder (for U.S. estate tax purposes) at the
time of death will be included in the individual's taxable estate for U.S.
federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise.
Taxation of Tax-Exempt Stockholders
The IRS has issued a revenue ruling in which it held that amounts
distributed by a REIT to a tax-exempt employee pension trust do not
constitute unrelated business taxable income ("UBTI"). Revenue rulings,
however, are interpretive in nature and are subject to revocation or
modification by the IRS. Based upon the ruling and the analysis therein,
distributions by CRIIMI MAE to a stockholder that is a tax-exempt entity
also should not constitute UBTI, provided that the tax-exempt entity has
not financed the acquisition of its Capital Shares with "acquisition
indebtedness" within the meaning of the Code, and that the Capital Shares
are not otherwise used in an unrelated trade or business of the tax-exempt
entity.
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<PAGE>
Code section 401(a) pension trusts generally will not be treated as a
single individual for purposes of determining whether CRIIMI MAE satisfies
the prohibition against REITs being closely held (closely held being
defined as more than 50% of the value of its outstanding stock being
owned, directly or indirectly, by or for five or fewer individuals).
Instead, a "look-through" rule will be applied, whereby the beneficiaries
of the pension trust will be treated as holding stock in CRIIMI MAE in
proportion to their interests in the pension trust.
If CRIIMI MAE were to satisfy the closely-held prohibition only by
application of the "look-through" rule, pension trusts holding more than
10% by value of the interests in CRIIMI MAE may be required to treat a
percentage of the dividends received from CRIIMI MAE as UBTI. Generally,
a percentage of dividends received by such 10% pension trust shareholders
will be treated as UBTI if: (i) at least one pension trust holds more than
25% by value of the interests in CRIIMI MAE, or (ii) one or more pension
trusts (each of which hold more than 10% by value of interests in CRIIMI
MAE) hold in the aggregate more than 50% by value of the interests in
CRIIMI MAE. The percentage treated as UBTI would be the gross income of
CRIIMI MAE that is derived from an unrelated trade or business (determined
as if CRIIMI MAE were a pension trust) divided by the gross income of
CRIIMI MAE for the year in which the dividends were paid. If the
percentage so determined was less than 5%, none of the dividends would be
treated as UBTI.
CRIIMI MAE currently intends to issue debt instruments which might be
considered TMPs under Section 770(i) of the Code. If CRIIMI MAE issues
TMPs, some portion of the ordinary or capital gain dividends received by a
tax-exempt stockholder may be considered excess inclusions. If a portion
of the ordinary or capital gain dividends received by a tax-exempt
stockholder is designated as excess inclusion, those amounts will be
considered UBTI. Additionally, the UBTI of a tax-exempt stockholder shall
in no event be less than its allocable excess inclusion, regardless of its
other items of income or deduction. CRIIMI MAE does not anticipate that a
significant portion of its ordinary and capital gain dividends will
consist of excess inclusion.
Information Reporting Requirements and Backup Withholding Tax
Payments in respect of dividends or proceeds from the sale or other
disposition of Capital Shares may be subject to information reporting to
the IRS and to a 31% U.S. backup withholding tax. Backup withholding
generally will not apply, however, to a holder who furnishes a correct
taxpayer identification number and makes any other required certification
or who is otherwise exempt from backup withholding. In addition, backup
withholding generally will not apply to dividends paid on Capital Shares
to a Non-U.S. Holder outside of the United States. Backup withholding is
not an additional tax. Rather, the amount of any backup withholding with
respect to a payment to a stockholder will be allowed as a credit against
such stockholder's federal income tax liability and may entitle such
stockholder to a refund, provided that the required information is
furnished to the IRS. Accordingly, stockholders should consult their own
tax advisors with respect to any such information reporting and backup
withholding requirements, including their potential for qualification for
exemption therefrom.
UNDERWRITING
Subject to the terms and conditions contained in an underwriting
agreement among Friedman, Billings, Ramsey & Co., Inc., BT Securities
Corporation (the "Underwriters") and CRIIMI MAE (the "Underwriting
Agreement"), the Underwriters have severally agreed to purchase from
CRIIMI MAE, and CRIIMI MAE has agreed to sell to the Underwriters, at the
price set forth on the cover page of this Prospectus Supplement, the
number of Series B Preferred Shares set forth below opposite their names:
<TABLE>
<CAPTION>
Number of
Shares
---------
<S> <C>
Friedman, Billings, Ramsey & Co., Inc..........
BT Securities Corporation...................... ---------
Total 2,300,000
=========
</TABLE>
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<PAGE>
The Underwriting Agreement provides that the Underwriters' obligation to
purchase the Series B Preferred Shares is subject to the satisfaction of
certain conditions, including the receipt of certain legal opinions. The
nature of the Underwriters' obligations is such that they are committed to
purchase all of the Series B Preferred Shares if any are purchased.
CRIIMI MAE has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus Supplement, to purchase up to
300,000 additional Series B Preferred Shares at the price set forth on the
cover page of this Prospectus Supplement. The Underwriters may exercise
this option in whole or, from time to time, in part, solely for the
purpose of covering over-allotments, if any, made in connection with the
sale of the Series B Preferred Shares offered hereby.
The Underwriters have advised the Company that they propose to offer the
Series B Preferred Shares offered hereby for sale, from time to time, to
purchasers directly or through agents, or to underwriters or dealers in
negotiated transactions or in a combination of such methods of sale, at
fixed prices that may be changed, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at
negotiated prices. The Underwriters also may sell the Common Shares
issuable to them upon conversion of the Series B Preferred Shares
purchased pursuant to the Underwriting Agreement, to purchasers directly
or through agents, through brokers in brokerage transactions on the NYSE,
through short sales of such Common Shares, or to underwriters or dealers
in negotiated transactions or in a combination of such methods of sale, at
fixed prices that may be changed, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at
negotiated prices.
Brokers, dealers, agents and underwriters that participate in the
distribution of the Series B Preferred Shares offered hereby, or the
Common Shares underlying the Series B Preferred Shares, may be deemed to
be underwriters under the Securities Act of 1933, as amended (the
"Securities Act"). Those who act as underwriter, broker, dealer or agent
in connection with the sale of the Series B Preferred Shares offered
hereby, or the underlying Common Shares, will be selected by the
Underwriters and may have other business relationships with CRIIMI MAE and
its subsidiaries or affiliates in the ordinary course of business.
CRIIMI MAE has agreed not to register for sale, sell, contract to sell
or otherwise dispose of any Series B Preferred Shares or any other series
of Preferred Stock (other than Series A Preferred Shares) for a period of
180 days after the date of this Prospectus Supplement without the prior
written consent of the Underwriters. CRIIMI MAE has also agreed to
indemnify the Underwriters against certain liabilities, including certain
liabilities under the Securities Act or to contribute to payments the
Underwriters may be required to make in respect thereof.
LEGAL MATTERS
Certain matters relating to (i) the validity of the Series B Preferred
Shares offered hereby and (ii) the continued REIT status of CRIIMI MAE
will be passed upon for CRIIMI MAE by Swidler & Berlin, Chartered,
Washington, D.C. Certain legal matters in connection with the Series B
Preferred Shares offered hereby will be passed upon for the Underwriters
by Akin, Gump, Strauss, Hauer & Feld, L.L.P., Washington, D.C.
EXPERTS
The financial statements included in CRIIMI MAE's Annual Report on Form
10-K for the year ended December 31, 1995, incorporated herein by
reference, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in its reports with respect thereto, and have
been incorporated by reference herein in reliance upon the authority of
said firm as experts in accounting and auditing.
S-12
<PAGE>
PROSPECTUS
CRIIMI MAE INC.
$200,000,000
DEBT SECURITIES, PREFERRED SHARES AND COMMON SHARES
CRIIMI MAE Inc. ("CRIIMI MAE") may from time to time offer in one or more
series its unsecured subordinated debt securities (the "Debt Securities"),
shares of its preferred stock, par value $.01 per share (the "Preferred
Shares"), and shares of its common stock, par value $.01 per share (the
"Common Shares"), with an aggregate public offering price of up to
$200,000,000 (or its equivalent based on the exchange rate at the time of
sale) in amounts, at prices and on terms to be determined at the time of
offering. The Debt Securities, Preferred Shares and Common Shares
(collectively, the "Securities") may be offered, separately or together, in
separate series in amounts, at prices and on terms to be set forth in
supplements to this Prospectus (a "Prospectus Supplement").
The Debt Securities will be direct unsecured obligations of CRIIMI MAE
subordinated to existing and future senior indebtedness, as defined. See
"Description of Debt Securities."
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable: (i) in the case of Debt Securities, the
specific title, ranking, aggregate principal amount, currency, form (which may
be registered or bearer, or certificated or global), authorized denominations,
maturity, rate (or manner of calculation thereof) and time of payment of
interest, terms for redemption at the option of CRIIMI MAE or repayment at the
option of the holder, terms for sinking fund payments, terms for conversion
into Preferred Shares or Common Shares, covenants and any initial public
offering price; (ii) in the case of Preferred Shares, the specific title and
stated value, any dividend, liquidation, redemption, conversion, voting and
other rights, and any initial public offering price; and (iii) in the case of
Common Shares, any public offering price. In addition, such specific terms may
include limitations on direct or beneficial ownership and restrictions on
transfer of the Securities, in each case as may be appropriate to preserve the
status of CRIIMI MAE as a real estate investment trust ("REIT") for federal
income tax purposes.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities
covered by such Prospectus Supplement.
The Securities may be offered directly, through agents designated from time
to time by CRIIMI MAE, or to or through underwriters or dealers. If any agents
or underwriters are involved in the sale of any of the Securities, their
names, and any applicable purchase price, fee, commission or discount
arrangement between or among them, will be set forth, or will be calculable
from the information set forth, in the applicable Prospectus Supplement. See
"Plan of Distribution." No Securities may be sold without delivery of the
applicable Prospectus Supplement describing the method and terms of the
offering of such series of Securities.
CRIIMI MAE's Common Shares are traded on the New York Stock Exchange (the
"NYSE") under the symbol "CMM."
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF THE SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
----------------
THE DATE OF THIS PROSPECTUS IS FEBRUARY 1, 1996.
<PAGE>
AVAILABLE INFORMATION
CRIIMI MAE and its subsidiaries, CRI Liquidating REIT, Inc. ("CRI
Liquidating") and CRIIMI MAE Financial Corporation, are subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith file reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). Reports, proxy statements and other information filed by CRIIMI
MAE, CRI Liquidating and CRIIMI MAE Financial Corporation can be inspected and
copied at the SEC's Public Reference Room, 450 Fifth Street, N.W., Washington,
D.C. 20549 and the SEC's Regional Offices at 7 World Trade Center, Suite 1300,
New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and copies of such material can be obtained from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, reports, proxy material and other
information concerning CRIIMI MAE, CRI Liquidating and CRIIMI MAE Financial
Corporation may be inspected at the NYSE, 20 Broad Street, New York, New York
10005.
This Prospectus constitutes part of a Registration Statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement")
filed by CRIIMI MAE with the SEC under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus does not contain all of the
information included in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the SEC. Reference is
made to the Registration Statement for further information with respect to
CRIIMI MAE and the Securities. Statements contained in this Prospectus and any
accompanying Prospectus Supplement concerning the provisions or contents of
any contract, agreement or any other document referred to herein are not
necessarily complete. With respect to each such contract, agreement or
document filed as an exhibit to the Registration Statement, reference is made
to such exhibit for a more complete description of the matters involved, and
each such statement shall be deemed qualified in its entirety by such
reference to the copy of the applicable document filed with the Commission.
The Registration Statement including the exhibits and schedules thereto, may
be inspected without charge at the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. and copies of it or any part thereof may be
obtained from such office, upon payment of the fees prescribed by the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by CRIIMI MAE with the SEC (File
No. 1-10360) are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1994, as
amended on Form 10K/A on March 27, 1995 and April 11, 1995.
2. Quarterly Report on Form 10-Q for the quarter ended September 30,
1995.
3. Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
4. Quarterly Report on Form 10-Q for the quarter ended March 31, 1995.
5. Definitive Proxy Statement dated April 28, 1995.
6. Definitive Proxy Statement dated April 6, 1993.
7. Form 8-K, as filed with the SEC on June 30, 1995.
8. Form 8-A, as filed with the SEC on October 16, 1989.
9. Form 8-B, as filed with the SEC on October 27, 1993.
All documents filed by CRIIMI MAE pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Securities offered hereby shall
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be deemed to be incorporated by reference in this Prospectus from the date of
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
CRIIMI MAE will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, on the
written or oral request of any such person, a copy of any or all of the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference. Requests for such copies
should be directed to: CRIIMI MAE Inc., Investor Services, 11200 Rockville
Pike, Rockville, Maryland 20852, or telephone (301) 816-2300 or toll-free
(800) 678-1116.
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CRIIMI MAE
CRIIMI MAE, a full service mortgage company structured as a self-managed
real estate investment trust ("REIT"), invests in government insured and
guaranteed mortgages secured by multifamily housing complexes located
throughout the United States ("Government Insured Multifamily Mortgages") and
in uninsured mortgage and mortgage-related investments such as higher
yielding, higher risk, uninsured subordinated securities backed by multifamily
and other commercial mortgages, using a combination of debt and equity
financing. As a result of a shareholder-approved merger transaction ("Merger")
with certain businesses affiliated with C.R.I., Inc. which was consummated in
June 1995, CRIIMI MAE expanded its lines of business to include mortgage
advisory services, mortgage servicing and mortgage origination. CRIIMI MAE
also acquired a team of mortgage, real estate, and financial experts. CRIIMI
MAE's principal objectives are to provide stable or increasing quarterly cash
distributions to its stockholders.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement for any
offering of Securities, CRIIMI MAE intends to use the majority of the net
proceeds from the sale of Securities (i) to acquire additional mortgage
investments, including uninsured and/or subordinated mortgage investments,
(ii) to sponsor and/or participate in collateralized mortgage obligation
programs, (iii) to make other investments and/or acquisitions relating to
CRIIMI MAE's mortgage business, (iv) to retire certain indebtedness of CRIIMI
MAE and/or (v) for other general corporate purposes, including working
capital. Pending their use for the foregoing purposes, the net proceeds are
expected to be invested in short term, interest-bearing investments.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth CRIIMI MAE's consolidated ratios of earnings
to fixed charges for the periods shown :
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
--------------------------------------------------- ----------------------------
1990 1991 1992 1993 1994 1994 1995
----- ----- ----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1.82 1.61 1.69 1.48 1.66 1.77 1.35
</TABLE>
The ratios of earnings to fixed charges were computed by dividing earnings,
as defined below, by fixed charges. For this purpose, earnings consist of
CRIIMI MAE's consolidated net income plus fixed charges, extraordinary items
and loss from investment in limited partnership. Fixed charges consist of
gross interest expense including amortization of debt expense, discount or
premium. To date, CRIIMI MAE has not issued any Preferred Shares; therefore,
the ratios of earnings to combined fixed charges and preferred share dividends
are unchanged from the ratios presented in this section.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities are to be issued under an indenture (the "Indenture")
between CRIIMI MAE and a trustee (the "Trustee"). The form of the Indenture is
filed as an exhibit to the Registration Statement of which this Prospectus is
a part. The Indenture is subject to and governed by the Trust Indenture Act of
1939, as amended (the "TIA"). The statements made under this heading relating
to the Debt Securities and the Indenture, as modified or suspended by any
applicable Prospectus Supplement, are summaries of the provisions thereof and
do not purport to be complete and are qualified in their entirety by reference
to the Indenture and such Debt Securities.
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The Debt Securities will be direct, unsecured obligations of CRIIMI MAE and,
as set forth below under "--Subordination," will be subordinate in right of
payment to Senior Debt (as defined below) of CRIIMI MAE. In addition to the
terms of the Indenture and any specific, express terms of the Debt Securities
described below, the issuance of the Debt Securities will be limited by, and
subject to certain terms of, CRIIMI MAE's existing financing facilities.
TERMS
The Indenture will provide that the Debt Securities may be issued without
limit as to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the CRIIMI MAE Board or as established in one or more indentures
supplemental to such Indenture. All Debt Securities of one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series.
The Indenture will also provide that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under the Indenture may resign or be removed with respect to one or
more series of Debt Securities, and a successor Trustee may be appointed to
act with respect to such series. In the event that two or more persons are
acting as Trustee with respect to different series of Debt Securities, each
such Trustee shall be a Trustee of a trust under the Indenture separate and
apart from the trust administered by any other Trustee, and, except as
otherwise indicated therein, any action described therein to be taken by the
Trustee may be taken by each such Trustee with respect to, and only with
respect to, the one or more series of Debt Securities for which it is Trustee
under the Indenture.
Reference is made to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:
(1) the title of such Debt Securities;
(2) the aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt Securities
will be issued and, if other than the principal amount thereof, the portion
of the principal amount thereof payable upon declaration of acceleration of
the maturity thereof, or (if applicable) the portion of the principal
amount of such Debt Securities that is convertible into Common Shares or
Preferred Shares, or the method by which any such portion shall be
determined;
(4) if convertible, in connection with the preservation of CRIIMI MAE's
status as a REIT, any applicable limitations on the ownership or
transferability of the Common Shares or Preferred Shares into which such
Debt Securities are convertible;
(5) the date or dates, or the method for determining such date or dates,
on which the principal of such Debt Securities will be payable;
(6) the rate or rates (which may be fixed or variable), or the method by
which such rate or rates shall be determined, at which such Debt Securities
will bear interest, if any;
(7) the date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the interest payment dates on
which any such interest will be payable, the regular record dates for such
interest payment dates, or the method by which such dates shall be
determined, the persons to whom such interest shall be payable, and the
basis upon which interest shall be calculated if other than that of a 360-
day year of twelve 30-day months;
(8) the place or places where the principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable, where such Debt
Securities may be surrendered for conversion or registration of transfer or
exchange and where notices or demands to or upon CRIIMI MAE in respect of
such Debt Securities and the Indenture may be served;
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(9) the period or periods within which, the price or prices at which and
the other terms and conditions upon which such Debt Securities may be
redeemed, as a whole or in part, at the option of CRIIMI MAE, if CRIIMI MAE
is to have such an option;
(10) the obligation, if any, of CRIIMI MAE to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous provision or
at the option of a holder thereof, and the period or periods within which,
the price or prices at which and the other terms and conditions upon which
such Debt Securities will be redeemed, repaid or purchased, as a whole or
in part, pursuant to such obligation;
(11) if other than U.S. dollars, the currency or currencies in which such
Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency
or currencies, and the terms and conditions relating thereto;
(12) whether the amount of payments of principal of (and premium, if any)
or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not be, based on a currency, currencies, currency unit
or units or composite currency or currencies) and the manner in which such
amounts shall be determined;
(13) whether such Debt Securities will be issued in the form of one or
more global securities and whether such global securities are to be
issuable in a temporary global form or permanent global form;
(14) any additions to, modifications of or deletions from the terms of
such Debt Securities with respect to the events of default or covenants set
forth in the Indenture;
(15) whether such Debt Securities will be issued in certificated or book-
entry form;
(16) whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the denominations
thereof and terms and conditions relating thereto;
(17) the applicability, if any, of the defeasance and covenant defeasance
provisions of the Indenture;
(18) the terms, if any, upon which such Debt Securities may be
convertible into Common Shares or Preferred Shares and the terms and
conditions upon which such conversion will be effected, including, without
limitation, the initial conversion price or rate and the conversion period;
(19) whether and under what circumstances CRIIMI MAE will pay additional
amounts on such Debt Securities in respect of any tax, assessment or
governmental charge and, if so, whether CRIIMI MAE will have the option to
redeem such Debt Securities in lieu of making such payment; and
(20) any other terms of such Debt Securities not inconsistent with the
provisions of the Indenture.
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities") or that the principal amount thereof
payable at their stated maturity may be more or less than the principal amount
thereof at original issuance ("Indexed Securities"). Special U.S. federal
income tax, accounting and other considerations applicable to Original Issue
Discount Securities or Indexed Securities will be described in the applicable
Prospectus Supplement.
Except as may be set forth in any Prospectus Supplement, the Debt Securities
will not contain any provisions that would limit the ability of CRIIMI MAE to
incur indebtedness or that would afford holders of Debt Securities protection
in the event of a highly leveraged or similar transaction involving CRIIMI MAE
or in the event of a change of control. Restrictions on ownership and
transfers of CRIIMI MAE's Common Shares and Preferred Shares are designed to
preserve its status as a REIT and, therefore, may act to prevent or hinder a
change of control. See "Description of Capital Stock." Reference is made to
the applicable Prospectus Supplement for information with respect to any
deletions from, modifications of, or additions to, the events of default or
covenants of CRIIMI MAE that are described below, including any addition of a
covenant or other provision providing event risk or similar protection.
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DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof.
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any series of
Debt Securities will be payable at the corporate trust office of the Trustee;
provided that, at the option of CRIIMI MAE, payment of interest may be made by
check mailed to the address of the person entitled thereto as it appears in
the register to be maintained by the Trustee or by wire transfer of funds to
such person at an account maintained within the United States.
Any interest not punctually paid or duly provided for on any interest
payment date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the holder on the applicable record date and
may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
applicable Trustee, notice whereof shall be given to each holder of such Debt
Security not less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner, all as more completely described
in the Indenture.
Subject to certain limitations imposed upon Debt Securities issued in book-
entry form, the Debt Securities of any series will be exchangeable for other
Debt Securities of the same series and of a like aggregate principal amount
and tenor of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the applicable Trustee. In
addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer thereof at the corporate trust office
of the applicable Trustee. Every Debt Security tendered for conversion,
registration of transfer or exchange shall be duly endorsed or accompanied by
a written instrument of transfer. No service charge will be made for any
registration of transfer or exchange of any Debt Securities, but CRIIMI MAE
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. If the applicable Prospectus
Supplement refers to any transfer agent (in addition to the applicable
Trustee) initially designated by CRIIMI MAE with respect to any series of Debt
Securities, CRIIMI MAE may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that CRIIMI MAE will be required to maintain a
transfer agent in each place of payment for such series. CRIIMI MAE may at any
time designate additional transfer agents with respect to any series of Debt
Securities.
To protect CRIIMI MAE's status as a REIT, CRIIMI MAE may refuse to effect a
transfer of Debt Securities if, as a result of such transfer, any person would
beneficially own, either directly or indirectly, more than 9.8% of CRIIMI
MAE's outstanding capital stock. Neither CRIIMI MAE nor any Trustee shall be
required to (i) issue, register the transfer of or exchange Debt Securities of
any series during a period beginning at the opening of business 15 days before
any selection of Debt Securities of that series to be redeemed and ending at
the close of business on the day of mailing of the relevant notice of
redemption; (ii) register the transfer of or exchange any Debt Security, or
portion thereof, called for redemption, except the unredeemed portion of any
Debt Security being redeemed in part; or (iii) issue, register the transfer of
or exchange any Debt Security that has been surrendered for repayment at the
option of the holder, except the portion, if any, of such Debt Security not to
be so repaid.
MERGER, CONSOLIDATION OR SALE
The Indenture will provide that CRIIMI MAE may consolidate with, or sell,
lease or convey all or substantially all of its assets to, or merge with or
into, any other corporation or trust or other entity provided that (a) either
CRIIMI MAE shall be the continuing corporation, or the successor corporation
(if other than CRIIMI MAE) formed by or resulting from any such consolidation
or merger or which shall have received the transfer of such assets shall
expressly assume payment of the principal of (and premium, if any) and
interest on all of the
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Debt Securities and the due and punctual performance and observance of all of
the covenants and conditions contained in the Indenture; (b) immediately after
giving effect to such transaction and treating any indebtedness that becomes
an obligation of CRIIMI MAE or any subsidiary as a result thereof as having
been incurred by CRIIMI MAE or such subsidiary at the time of such
transaction, no event of default under the Indenture, and no event which,
after notice or the lapse of time, or both, would become such an event of
default, shall have occurred and be continuing; and (c) an officers'
certificate and legal opinion covering such conditions shall be delivered to
each Trustee.
CERTAIN COVENANTS
Existence. Except as permitted under "--Merger, Consolidation or Sale,"
CRIIMI MAE will do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, rights (charter and
statutory) and franchises; provided, however, that CRIIMI MAE shall not be
required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business.
Maintenance of Properties. CRIIMI MAE will cause all of its material
properties used or useful in the conduct of its business or the business of
any subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of CRIIMI MAE may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that CRIIMI MAE and its
subsidiaries shall not be prevented from selling or otherwise disposing for
value its mortgage investments and other assets in the ordinary course of
business.
Payment of Taxes and Other Claims. CRIIMI MAE will pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed upon it or any
subsidiary or upon the income, profits or property of CRIIMI MAE or any
subsidiary, and (ii) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of CRIIMI MAE
or any subsidiary; provided, however, that CRIIMI MAE shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith.
Additional Covenants. Any additional covenants of CRIIMI MAE with respect to
any series of Debt Securities will be set forth in the Prospectus Supplement
relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture will provide that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (a) default
for 30 days in the payment of any installment of interest on any Debt Security
of such series; (b) default in the payment of the principal of (or premium, if
any, on) any Debt Security of such series when due and payable, at maturity,
upon redemption or otherwise which continues for five business days; (c)
default in making any sinking fund payment as required for any Debt Security
of such series which continues for five business days; (d) default in the
performance or breach of any other covenant or warranty of CRIIMI MAE
contained in the Indenture (other than a covenant added to the Indenture
solely for the benefit of a series of Debt Securities issued thereunder other
than such series), continued for 60 days after written notice as provided in
the Indenture; (e) a default not being contested in good faith by CRIIMI MAE
under any bond, debenture, note or other evidence of indebtedness for money
borrowed by CRIIMI MAE (including obligations under leases required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles but not including any indebtedness or obligations for
which recourse is limited to property purchased) in an aggregate principal
amount in excess of $10,000,000 or under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any indebtedness for money borrowed by CRIIMI MAE (including such leases but
not including such indebtedness or obligations for which recourse is limited
to property purchased) in an aggregate principal amount in excess of
$10,000,000 by CRIIMI MAE, whether such indebtedness now exists or shall
hereafter be created which default shall have
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resulted in such indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise have become due and payable or such
obligations being accelerated, without such acceleration having been rescinded
or annulled; (f) certain events of bankruptcy, insolvency or reorganization,
or court appointment of a receiver, liquidator or trustee of CRIIMI MAE or any
Significant Subsidiary or either of its properties; and (g) any other Event of
Default provided with respect to a particular series of Debt Securities. The
term "Significant Subsidiary" means each significant subsidiary (as defined in
Regulation S-X promulgated under the Securities Act) of CRIIMI MAE.
If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time outstanding occurs and is continuing, then in every
such case the applicable Trustee or the holders of not less than a majority in
principal amount of the outstanding Debt Securities of that series may declare
the principal amount (or, if the Debt Securities of that series are Original
Issue Discount Securities or Indexed Securities, such portion of the principal
amount as may be specified in the terms thereof) of all the Debt Securities of
that series to be due and payable immediately by written notice thereof to
CRIIMI MAE (and to the applicable Trustee if given by the holders). However,
at any time after such a declaration of acceleration with respect to Debt
Securities of such series (or of all Debt Securities then outstanding under
the Indenture, as the case may be) has been made, but before a judgment or
decree for payment of the money due has been obtained by the applicable
Trustee, the holders of not less than a majority in principal amount of
outstanding Debt Securities of such series (or of all Debt Securities then
outstanding under the Indenture, as the case may be) may rescind and annul
such declaration and its consequences if (a) CRIIMI MAE shall have paid or
deposited with the applicable Trustee all required payments of the principal
of (and premium, if any) and interest on the Debt Securities of such series
(or of all Debt Securities then outstanding under the applicable Indenture, as
the case may be), plus certain fees, expenses, disbursements and advances of
the applicable Trustee and (b) all Events of Default, other than the non-
payment of accelerated principal (or specified portion thereof), with respect
to Debt Securities of such series (or of all Debt Securities then outstanding
under the Indenture, as the case may be) have been cured or waived as provided
in the Indenture. The Indenture will also provide that the holders of not less
than a majority in principal amount of the outstanding Debt Securities of any
series (or of all Debt Securities then outstanding under the Indenture, as the
case may be) may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or (y) in
respect of a covenant or provision contained in the Indenture that cannot be
modified or amended without the consent of the holder of each outstanding Debt
Security affected thereby.
Each Trustee will be required to give notice to the holders of Debt
Securities within 90 days of a default under the Indenture unless such default
shall have been cured or waived; provided, however, that such Trustee may
withhold notice to the holders of any series of Debt Securities of any default
with respect to such series (except a default in the payment of the principal
of (or premium, if any) or interest on any Debt Security of such series or in
the payment of any sinking fund installment in respect of any Debt Security of
such series) if designated officers of such Trustee consider such withholding
to be in the interest of such holders.
The right of any holder to institute a proceeding with respect to the
Indenture will be subject to certain conditions precedent including notice and
indemnity to the Trustee, but the holder has an absolute right to receipt of
principal of (and premium, if any) and interest on such holder's Debt Security
on or after the respective due dates expressed in the Debt Security, and to
institute suit for the enforcement of any such payments.
Subject to provisions in the Indenture relating to its duties in case of
default, no Trustee will be under an obligation to exercise any of its rights
or powers under the Indenture at the request or direction of any holders of
any series of Debt Securities then outstanding under the Indenture, unless
such holders shall have offered to the Trustee thereunder reasonable security
or indemnity. The holders of not less than a majority in aggregate principal
amount of the outstanding Debt Securities of any series (or of all Debt
Securities then outstanding under the Indenture, as the case may be) shall
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the applicable Trustee, or of
exercising any trust or power conferred upon such Trustee. However, each
Trustee may refuse to follow any direction which is in conflict with any law
or the
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Indenture, which may involve such Trustee in personal liability or which may
be unduly prejudicial to the holders of Debt Securities of such series not
joining therein.
Within 120 days after the close of each fiscal year, CRIIMI MAE will be
required to deliver to each Trustee a certificate, signed by one of several
specified officers, stating whether or not such officer has knowledge of any
default under the Indenture and, if so, specifying each such default and the
nature and status thereof.
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture may be made only with the
consent of the holders of not less than a majority in aggregate principal
amount of all outstanding Debt Securities issued under such Indenture which
are affected by such modification or amendment; provided, however, that no
such modification or amendment may, without the consent of the holder of each
such Debt Security affected thereby, (a) change the stated maturity of the
principal of, or any installment of interest (or premium, if any) on, any such
Debt Security; (b) reduce the principal amount of, or the rate or amount of
interest on, or any premium payable on redemption of, any such Debt Security,
or reduce the amount of principal of an Original Issue Discount Security that
would be due and payable upon declaration of acceleration of the maturity
thereof or would be provable in bankruptcy, or adversely affect any right of
repayment of the holder of any such Debt Security; (c) change the place of
payment, or the coin or currency, for payment of principal of, premium, if
any, or interest on any such Debt Security; (d) impair the right to institute
suit for the enforcement of any payment on or with respect to any such Debt
Security; (e) reduce the above-stated percentage of outstanding Debt
Securities of any series necessary to modify or amend the Indenture, to waive
compliance with certain provisions thereof or certain defaults and
consequences thereunder or to reduce the quorum or voting requirements set
forth in the Indenture; or (f) modify any of the foregoing provisions or any
of the provisions relating to the waiver of certain past defaults or certain
covenants, except to increase the required percentage to effect such action or
to provide that certain other provisions may not be modified or waived without
the consent of the holder of such Debt Security.
The holders of not less than a majority in principal amount of outstanding
Debt Securities issued under the Indenture have the right to waive compliance
by CRIIMI MAE with certain covenants in such Indenture.
Modifications and amendments of the Indenture may be made by CRIIMI MAE and
the respective Trustee thereunder without the consent of any holder of Debt
Securities for any of the following purposes: (i) to evidence the succession
of another person to CRIIMI MAE as obligor under such Indenture; (ii) to add
to the covenants of CRIIMI MAE for the benefit of the holders of all or any
series of Debt Securities or to surrender any right or power conferred upon
CRIIMI MAE in such Indenture; (iii) to add Events of Default for the benefit
of the holders of all or any series of Debt Securities; (iv) to add or change
any provisions of the Indenture to facilitate the issuance of, or to
liberalize certain terms of, Debt Securities in bearer form, or to permit or
facilitate the issuance of Debt Securities in uncertificated form, provided
that such action shall not adversely affect the interests of the holders of
the Debt Securities of any series in any material respect; (v) to change or
eliminate any provisions of the Indenture, provided that any such change or
elimination shall become effective only when there are no Debt Securities
outstanding of any series created prior thereto which are entitled to the
benefit of such provision; (vi) to secure the Debt Securities; (vii) to
establish the form or terms of Debt Securities of any series, including the
provisions and procedures, if applicable, for the conversion of such Debt
Securities into Common Shares or Preferred Shares; (viii) to provide for the
acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the Indenture by more than one Trustee;
(ix) to cure any ambiguity, defect or inconsistency in the Indenture, provided
that such action shall not adversely affect the interests of holders of Debt
Securities of any series issued under such Indenture in any material respect;
or (x) to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of
such Debt Securities, provided that such action shall not adversely affect the
interests of the holders of the Debt Securities of any series in any material
respect.
The Indenture will provide that in determining whether the holders of the
requisite principal amount of outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent
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or waiver thereunder or whether a quorum is present at a meeting of holders of
Debt Securities, (i) the principal amount of an Original Issue Discount
Security that shall be deemed to be outstanding shall be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon declaration of acceleration of the maturity thereof, (ii)
the principal amount of a Debt Security denominated in a foreign currency that
shall be deemed outstanding shall be the U.S. dollar equivalent, determined on
the issue date for such Debt Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the U.S. dollar equivalent on the
issue date of such Debt Security of the amount determined as provided in (i)
above), (iii) the principal amount of an Indexed Security that shall be deemed
outstanding shall be the principal face amount of such Indexed Security at
original issuance, unless otherwise provided with respect to such Indexed
Security pursuant to the Indenture, and (iv) Debt Securities owned by CRIIMI
MAE or any other obligor upon the Debt Securities or any affiliate of CRIIMI
MAE or of such other obligor shall be disregarded.
The Indenture will contain provisions for convening meetings of the holders
of Debt Securities of a series. A meeting may be called at any time by the
applicable Trustee, and also, upon request, by CRIIMI MAE or the holders of at
least 25% in principal amount of the outstanding Debt Securities of such
series, in any such case upon notice given as provided in the Indenture.
Except for any consent that must be given by the holder of each Debt Security
affected by certain modifications and amendments of the Indenture, any
resolution presented at a meeting or adjourned meeting duly reconvened at
which a quorum is present may be adopted by the affirmative vote of the
holders of a majority in principal amount of the outstanding Debt Securities
of that series; provided, however, that, except as referred to above, any
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by
the holders of a specified percentage, which is less than a majority, in
principal amount of the outstanding Debt Securities of a series may be adopted
at a meeting or adjourned meeting duly reconvened at which a quorum is present
by the affirmative vote of the holders of such specified percentage in
principal amount of the outstanding Debt Securities of that series. Any
resolution passed or decision taken at any meeting of holders of Debt
Securities of any series duly held in accordance with the Indenture will be
binding on all holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of the
outstanding Debt Securities of a series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which may
be given by the holders of not less than a specified percentage in principal
amount of the outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the outstanding
Debt Securities of such series will constitute a quorum.
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of holders of Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that the Indenture expressly provides may be made, given or taken by
the holders of a specified percentage in principal amount of all outstanding
Debt Securities affected thereby, or of the holders of such series and one or
more additional series: (i) there shall be no minimum quorum requirement for
such meeting and (ii) the principal amount of the outstanding Debt Securities
of such series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into account
in determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under the
Indenture.
SUBORDINATION
Upon any distribution to creditors of CRIIMI MAE in a liquidation,
dissolution or reorganization, the payment of the principal of and interest on
the Debt Securities will be subordinated in right of payment to the prior
payment in full of all "Senior Debt" (as defined below), but the obligation of
CRIIMI MAE to make payment of the principal and interest on the Debt
Securities will not otherwise be affected. No payment of principal or interest
may be made on the Debt Securities at any time if a default on Senior Debt
exists that permits the holders of such Senior Debt to accelerate its maturity
and the default is the subject of judicial proceedings or CRIIMI MAE receives
notice of the default. After all Senior Debt is paid in full and until the
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Debt Securities are paid in full, holders will be subrogated to the rights of
holders of Senior Debt to the extent that distributions otherwise payable to
holders have been applied to the payment of Senior Debt. By reason of such
subordination, in the event of a distribution of assets upon insolvency,
certain general creditors of CRIIMI MAE may recover more, ratably, than
holders of the Debt Securities.
"Senior Debt" will be defined in the Indenture as the principal of and
interest on, or substantially similar payments to be made by CRIIMI MAE in
respect of, the following, whether outstanding at the date of execution of the
Indenture or thereafter incurred, created or assumed: (a) indebtedness of
CRIIMI MAE for money borrowed or represented by purchase-money obligations,
(b) indebtedness of CRIIMI MAE evidenced by notes, debentures, or bonds, or
other securities issued under the provisions of an indenture, fiscal agency
agreement or other instrument, (c) obligations of CRIIMI MAE as lessee under
leases of property either made as part of any sale and leaseback transaction
to which CRIIMI MAE is a party or otherwise, (d) indebtedness of any
partnerships or joint ventures which is included in the consolidated financial
statements of CRIIMI MAE, (e) indebtedness, obligations and liabilities of
others in respect of which CRIIMI MAE is liable contingently or otherwise to
pay or advance money or property or as guarantor, endorser or otherwise or
which CRIIMI MAE has agreed to purchase or otherwise acquire, and (f) any
binding commitment of CRIIMI MAE to fund any mortgage investment or to fund
any investment in any entity making such mortgage investment, in each case
other than (1) any such indebtedness, obligation or liability referred to in
clauses (a) through (f) above as to which, in the instrument creating or
evidencing the same pursuant to which the same is outstanding, it is provided
that such indebtedness, obligation or liability is not superior in right of
payment to the Debt Securities or rank pari passu with the Debt Securities,
(2) any such indebtedness, obligation or liability which is subordinated to
indebtedness of CRIIMI MAE to substantially the same extent as or to a greater
extent than the Debt Securities are subordinated, and (3) the Debt Securities.
There will be no restrictions in the Indenture upon the creation of additional
Senior Debt.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Under the Indenture, CRIIMI MAE will be able to discharge certain
obligations to holders of any series of Debt Securities issued thereunder that
have not already been delivered to the applicable Trustee for cancellation and
that either have become due and payable or will become due and payable within
one year (or scheduled for redemption within one year) by irrevocably
depositing with the applicable Trustee, in trust, funds in such currency or
currencies, currency unit or units or composite currency or currencies in
which such Debt Securities are payable in an amount sufficient to pay the
entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or
redemption date, as the case may be.
The Indenture will provide that, under certain circumstances, CRIIMI MAE may
elect either (a) to defease and be discharged from any and all obligations
with respect to such Debt Securities (except for the obligation to pay
additional amounts, if any, upon the occurrence of certain events of tax,
assessment or governmental charge with respect to payments on such Debt
Securities and the obligations to register the transfer or exchange of such
Debt Securities, to replace temporary or mutilated, destroyed, lost or stolen
Debt Securities, to maintain an office or agency in respect of such Debt
Securities and to hold moneys for payment in trust) ("defeasance") or (b) to
be released from its obligations with respect to such Debt Securities under
the Indenture or, under certain circumstances, its obligations with respect to
any other covenant, and any omission to comply with such obligations shall not
constitute a default or an Event of Default with respect to such Debt
Securities ("covenant defeasance"), in either case upon the irrevocable
deposit by CRIIMI MAE with the applicable Trustee, in trust, of an amount, in
such currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable at stated maturity, or
Government Obligations (as defined below), or both, applicable to such Debt
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any) and interest on such Debt Securities,
and any mandatory sinking fund or analogous payments thereon, on the scheduled
due dates therefor.
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Such a trust may be established only if, among other things, CRIIMI MAE has
delivered to the applicable Trustee an opinion of counsel (as specified in
each Indenture) to the effect that the holders of such Debt Securities will
not recognize income, gain or loss for U.S. federal income tax purposes as a
result of such defeasance or covenant defeasance and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance or covenant defeasance
had not occurred, and such opinion of counsel, in the case of defeasance, must
refer to and be based upon a ruling of the Internal Revenue Service or a
change in applicable U.S. federal income tax law occurring after the date of
the Indenture.
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations
of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which
issued the foreign currency in which the Debt Securities of such series are
payable, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America or such other
government, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or principal of any
such Government Obligation held by such custodian for the account of the
holder of a depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if after
CRIIMI MAE has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series, (a) the holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been,
and will be, fully discharged and satisfied through the payment of the
principal of (and premium, if any) and interest on such Debt Security as they
become due out of the proceeds yielded by converting the amount so deposited
in respect of such Debt Security into the currency, currency unit or composite
currency in which such Debt Security becomes payable as a result of such
election or such cessation of usage based on the applicable market exchange
rate. "Conversion Event" means the cessation of use of (i) a currency,
currency unit or composite currency both by the government of the country
which issued such currency and for the settlement of transactions by a central
bank or other public institutions of or within the international banking
community, (ii) the European Currency Unit ("ECU") both within the European
Monetary System established by the Resolution of December 5, 1978 of the
council of the European Economic Community, European Coal and Steel Community
and the European Atomic Energy Community (collectively, the "European
Communities") and for the settlement of transactions by public institutions of
or within the European Communities or (iii) any currency unit or composite
currency other than the ECU for the purposes for which it was established.
Unless otherwise provided in the applicable Prospectus Supplement, all
payments of principal of (and premium, if any) and interest on any Debt
Security that is payable in a foreign currency that ceases to be used by its
government of issuance shall be made in U.S. dollars.
The applicable Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications of the provisions described above, with respect to the Debt
Securities of or within a particular series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Shares or Preferred Shares will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will
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include whether such Debt Securities are convertible into Common Shares or
Preferred Shares, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option
of the holders or CRIIMI MAE, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such Debt Securities.
To protect CRIIMI MAE's status as a REIT, CRIIMI MAE may refuse to effect a
conversion of the Debt Securities if, as a result of such conversion, any
person would beneficially own, either directly or indirectly, more than 9.8%
of CRIIMI MAE's outstanding capital stock. See "Description of Capital Stock--
Common Shares--Restrictions on Ownership and Transfer."
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary identified in the applicable
Prospectus Supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the applicable Prospectus Supplement
relating to such series.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of CRIIMI MAE comprises 60 million Common
Shares and 25 million Preferred Shares. As of January 1, 1996, there were
issued and outstanding 30,407,024 Common Shares and no Preferred Shares. The
Common Shares are currently listed and are trading on the NYSE, and CRIIMI MAE
will seek to list with the NYSE any Common Shares offered in any Prospectus
Supplement hereto.
PREFERRED SHARES
General. The following description of the Preferred Shares sets forth
certain general terms and provisions of the Preferred Shares to which any
Prospectus Supplement may relate. The statements below describing the
Preferred Shares are in all respects subject to and qualified in their
entirety by reference to the applicable provisions of CRIIMI MAE's Articles of
Incorporation, as amended (the "Articles of Incorporation") and Bylaws and
applicable articles supplementary relating to any offering of Preferred Shares
("Articles Supplementary").
Terms. Subject to the limitations prescribed by the Articles of
Incorporation, the CRIIMI MAE Board is authorized to fix the number of shares
constituting each series of Preferred Shares and the designations and powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including such provisions
as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution of the CRIIMI MAE Board. The Preferred
Shares will, when issued, be fully paid and nonassessable by CRIIMI MAE and
will have no preemptive rights.
Reference is made to the Prospectus Supplement relating to the Preferred
Shares offered thereby for specific terms, including:
(1) The title and stated value of such Preferred Shares;
(2) The number of such Preferred Shares offered, the liquidation
preference per share and the offering price of such Preferred Shares;
(3) The dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Shares;
(4) The date from which dividends on such Preferred Shares shall
accumulate, if applicable;
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(5) The procedures for any auction and remarketing, if any, for such
Preferred Shares;
(6) The provision for a sinking fund, if any, for such Preferred Shares;
(7) The provision for redemption, if applicable, of such Preferred
Shares;
(8) Any listing of such Preferred Shares on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred
Shares will be convertible into Common Shares, including the conversion
price (or manner of calculation thereof);
(10) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Shares;
(11) A discussion of federal income tax considerations applicable to such
Preferred Shares;
(12) The relative ranking and preferences of such Preferred Shares as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of CRIIMI MAE;
(13) Any limitations on issuance of any series of Preferred Shares
ranking senior to or on a parity with such series of Preferred Shares as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of CRIIMI MAE; and
(14) Any limitations on direct or beneficial ownership and restrictions
on transfer, in each case as may be appropriate to preserve the status of
CRIIMI MAE as a REIT.
Rank. Unless otherwise specified in the Prospectus Supplement, the Preferred
Shares will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of CRIIMI MAE, rank (i) senior to all classes or
series of Common Shares and to all equity securities ranking junior to such
Preferred Shares with respect to dividend rights or rights upon liquidation,
dissolution or winding up of CRIIMI MAE; (ii) on a parity with all equity
securities issued by CRIIMI MAE the terms of which specifically provide that
such equity securities rank on a parity with the Preferred Shares with respect
to dividend rights or rights upon liquidation, dissolution or winding up of
CRIIMI MAE; and (iii) junior to all equity securities issued by CRIIMI MAE the
terms of which specifically provide that such equity securities rank senior to
the Preferred Shares with respect to dividend rights or rights upon
liquidation, dissolution or winding up of CRIIMI MAE. The term "equity
securities" does not include convertible debt securities.
Dividends. Holders of the Preferred Shares of each series will be entitled
to receive, when, as and if declared by the CRIIMI MAE Board, out of assets of
CRIIMI MAE legally available for payment, cash dividends at such rates and on
such dates as will be set forth in the applicable Prospectus Supplement. Each
such dividend shall be payable to holders of record as they appear on the
share transfer books of CRIIMI MAE on such record dates as shall be fixed by
the CRIIMI MAE Board.
Dividends on any series of the Preferred Shares may be cumulative or non-
cumulative, as provided in the applicable Prospectus Supplement. Dividends, if
cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the CRIIMI MAE Board fails to declare a
dividend payable on a dividend payment date on any series of the Preferred
Shares for which dividends are noncumulative, then the holders of such series
of the Preferred Shares will have no right to receive a dividend in respect of
the dividend period ending on such dividend payment date, and CRIIMI MAE will
have no obligation to pay the dividend accrued for such period, whether or not
dividends on such series are declared payable on any future dividend payment
date.
If Preferred Shares of any series are outstanding, no dividends will be
declared or paid or set apart for payment on the Preferred Shares of any other
series ranking, as to dividends, on a parity with or junior to the Preferred
Shares of such series for any period unless (i) if such series of Preferred
Shares has a cumulative dividend, 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 Preferred Shares of such
series for all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Shares does not have a cumulative dividend,
full dividends for the then current dividend period 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
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Preferred Shares of such series. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon Preferred Shares of
any series and the shares of any other series of Preferred Shares ranking on a
parity as to dividends with the Preferred Shares of such series, all dividends
declared upon Preferred Shares of such series and any other series of
Preferred Shares ranking on a parity as to dividends with such Preferred
Shares shall be declared pro rata so that the amount of dividends declared per
Preferred Share of such series and such other series of Preferred Shares shall
in all cases bear to each other the same ratio that accrued dividends per
share on the Preferred Shares of such series (which shall not include any
accumulation in respect of unpaid dividends for prior dividend periods if such
Preferred Shares do not have a cumulative dividend) and such other series of
Preferred Shares bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on
Preferred Shares of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative
dividends on the Preferred Shares of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for all past dividend periods and
the then current dividend period and (ii) if such series of Preferred Shares
does not have a cumulative dividend, full dividends on the Preferred Shares of
such series have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for the
then current dividend period, no dividends (other than in Common Shares or
other capital shares ranking junior to the Preferred Shares of such series as
to dividends and upon liquidation) shall be declared or paid or set aside for
payment or other distribution shall be declared or made upon the Common
Shares, or any other capital shares of CRIIMI MAE ranking junior to or on a
parity with the Preferred Shares of such series as to dividends or upon
liquidation, nor shall any Common Shares, or any other capital shares of
CRIIMI MAE ranking junior to or on a parity with the Preferred Shares of such
series as to dividends or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for
a sinking fund for the redemption of any such shares) by CRIIMI MAE (except by
conversion into or exchange for other capital shares of CRIIMI MAE ranking
junior to the Preferred Shares of such series as to dividends and upon
liquidation).
Any dividend payment made on shares of a series of Preferred Shares shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of such series which remains payable.
Redemption. If so provided in the applicable Prospectus Supplement, the
Preferred Shares will be subject to mandatory redemption or redemption at the
option of CRIIMI MAE, as a whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such Prospectus
Supplement.
The Prospectus Supplement relating to a series of Preferred Shares that is
subject to mandatory redemption will specify the number of such Preferred
Shares that shall be redeemed by CRIIMI MAE in each year commencing after a
date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon
(which shall not, if such Preferred Shares do not have a cumulative dividend,
include any accumulation in respect of unpaid dividends for prior dividend
periods) to the date of redemption. The redemption price may be payable in
cash or other property, as specified in the applicable Prospectus Supplement.
If the redemption price for Preferred Shares of any series is payable only
from the net proceeds of the issuance of capital shares of CRIIMI MAE, the
terms of such Preferred Shares may provide that, if no such capital shares
shall have been issued or to the extent the net proceeds from any issuance are
insufficient to pay in full the aggregate redemption price then due, such
Preferred Shares shall automatically and mandatorily be converted into the
applicable capital shares of CRIIMI MAE pursuant to conversion provisions
specified in the applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred Shares
has a cumulative dividend, full cumulative dividends on all shares of any
series of Preferred Shares shall have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart
for payment for all past dividend periods and the then current dividend period
and (ii) if such series of Preferred Shares does not have a cumulative
dividend, full dividends on the Preferred Shares of any series have been or
contemporaneously are
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declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for the then current dividend period, no shares of any
series of Preferred Shares shall be redeemed unless all outstanding Preferred
Shares of such series are simultaneously redeemed; provided, however, that the
foregoing shall not prevent the purchase or acquisition of Preferred Shares of
such series to preserve the REIT status of CRIIMI MAE or pursuant to a
purchase or exchange offer made on the same terms to holders of all
outstanding Preferred Shares of such series, and, unless (i) if such series of
Preferred Shares has a cumulative dividend, full cumulative dividends on all
outstanding shares of any series of Preferred Shares have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for all past dividend periods and
the then current dividend period and (ii) if such series of Preferred Shares
does not have a cumulative dividend, full dividends on the Preferred Shares of
any series have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for the
then current dividend period, CRIIMI MAE shall not purchase or otherwise
acquire directly or indirectly any Preferred Shares of such series (except by
conversion into or exchange for capital shares of CRIIMI MAE ranking junior to
the Preferred Shares of such series as to dividends and upon liquidation);
provided, however, that the foregoing shall not prevent the purchase or
acquisition of Preferred Shares of such series to preserve the REIT status of
CRIIMI MAE or pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding Preferred Shares of such series.
If fewer than all of the outstanding Preferred Shares of any series are to
be redeemed, the number of shares to be redeemed will be determined by CRIIMI
MAE and such shares may be redeemed pro rata from the holders of record of
such shares in proportion to the number of such shares held by such holders
(with adjustments to avoid redemption of fractional shares) or any other
equitable method determined by CRIIMI MAE.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Shares
of any series to be redeemed at the address shown on the share transfer books
of CRIIMI MAE. Each notice shall state: (i) the redemption date; (ii) the
number of shares and series of the Preferred Shares to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such
Preferred Shares are to be surrendered for payment of the redemption price;
(v) that dividends on the shares to be redeemed will cease to accrue on such
redemption date; and (vi) the date upon which the holder's conversion rights,
if any, as to such shares shall terminate. If fewer than all the Preferred
Shares of any series are to be redeemed, the notice mailed to each such holder
thereof shall also specify the number of Preferred Shares to be redeemed from
each such holder. If notice of redemption of any Preferred Shares has been
given and if the funds necessary for such redemption have been set aside by
CRIIMI MAE in trust for the benefit of the holders of any Preferred Shares so
called for redemption, then from and after the redemption date dividends will
cease to accrue on such Preferred Shares, such Preferred Shares shall no
longer be deemed outstanding and all rights of the holders of such shares will
terminate, except the right to receive the redemption price. Any moneys so
deposited which remain unclaimed by the holders of the Preferred Shares at the
end of two years after the redemption date will be returned by such bank or
trust company to CRIIMI MAE.
Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of CRIIMI MAE, then, before any
distribution or payment shall be made to the holders of any Common Shares or
any other class or series of capital shares of CRIIMI MAE ranking junior to
the Preferred Shares in the distribution of assets upon any liquidation,
dissolution or winding up of CRIIMI MAE, the holders of each series of
Preferred Shares shall be entitled to receive out of assets of CRIIMI MAE
legally available for distribution to stockholders, liquidating distributions
in the amount of the liquidation preference per share (set forth in the
applicable Prospectus Supplement), plus an amount equal to all dividends
accrued and unpaid thereon (which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods if such Preferred
Shares do not have a cumulative dividend). After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of
Preferred Shares will have no right or claim to any of the remaining assets of
CRIIMI MAE. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of CRIIMI MAE are
insufficient to pay the amount of the liquidating distributions on all
outstanding Preferred Shares and the corresponding amounts payable on all
shares
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of other classes or series of capital shares of CRIIMI MAE ranking on a parity
with the Preferred Shares in the distribution of assets upon liquidation,
dissolution or winding up, then the holders of the Preferred Shares and all
other such classes or series of capital shares shall share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
Preferred Shares, the remaining assets of CRIIMI MAE shall be distributed
among the holders of any other classes or series of capital shares ranking
junior to the Preferred Shares upon liquidation, dissolution or winding up,
according to their respective rights and preferences and in each case
according to their respective number of shares. For such purposes, the
consolidation or merger of CRIIMI MAE with or into any other corporation,
trust or entity, or the sale, lease or conveyance of all or substantially all
of the property or business of CRIIMI MAE, shall not be deemed to constitute a
liquidation, dissolution or winding up of CRIIMI MAE.
Voting Rights. Holders of the Preferred Shares will not have any voting
rights, except as set forth below or as otherwise from time to time required
by law or as indicated in the applicable Prospectus Supplement.
Unless provided otherwise for any series of Preferred Shares, so long as any
Preferred Shares remain outstanding, CRIIMI MAE will not, without the
affirmative vote or consent of the holders of at least a majority of the
shares of each series of Preferred Shares outstanding at the time, given in
person or by proxy, either in writing or at a meeting (such series voting
separately as a class), (i) authorize or create, or increase the authorized or
issued amount of, any class or series of capital shares ranking prior to such
series of Preferred Shares with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up or
reclassify any authorized capital shares of CRIIMI MAE into any such shares,
or create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) amend, alter or
repeal the provisions of CRIIMI MAE's Articles of Incorporation or the
Articles Supplementary for such series of Preferred Shares, whether by merger,
consolidation or otherwise (an "Event"), so as to materially and adversely
affect any right, preference, privilege or voting power of such series of
Preferred Shares or the holders thereof; provided, however, with respect to
the occurrence of any of the Events set forth in (ii) above, so long as the
Preferred Shares remain outstanding with the terms thereof materially
unchanged, taking into account that upon the occurrence of an Event, CRIIMI
MAE may not be the surviving entity, 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 Preferred Shares, and provided
further that (x) any increase in the amount of the authorized Common Shares or
Preferred Shares or the authorization, creation or issuance of any other
series of Preferred Shares or any other class or series of capital shares, or
(y) any increase in the amount of authorized shares of such series or any
other series of Preferred Shares or any other class or series of capital
shares, in each case ranking on a parity with or junior to the Preferred
Shares of such series with respect to 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.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred Shares shall
have been redeemed or called for redemption and sufficient funds shall have
been deposited in trust to effect such redemption.
Conversion Rights. The terms and conditions, if any, upon which any series
of Preferred Shares are convertible into Common Shares will be set forth in
the applicable Prospectus Supplement relating thereto. Such terms will include
the number of Common Shares into which the Preferred Shares are convertible,
the conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the
holders of the Preferred Shares or CRIIMI MAE, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of such Preferred Shares.
Restrictions on Ownership and Transfer. As discussed below under "--Common
Shares--Restrictions on Ownership and Transfer," for CRIIMI MAE to qualify as
a REIT under the Internal Revenue Code of 1986, as
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amended (the "Code"), not more than 50% in value of its outstanding capital
shares may be owned, directly or constructively, by five or fewer individuals
(as defined in the Code to include certain entities) during the last half of a
taxable year. To assist CRIIMI MAE in meeting this requirement, CRIIMI MAE may
take certain actions to limit the beneficial ownership, directly or
indirectly, by a single person of more than 9.8% of CRIIMI MAE's outstanding
capital stock, including any Preferred Shares of CRIIMI MAE. Therefore, the
Articles Supplementary for each series of Preferred Shares will contain
certain provisions restricting the ownership and transfer of the Preferred
Shares. The applicable Prospectus Supplement will specify any additional
ownership limitation relating to a series of Preferred Shares.
COMMON SHARES
The following description of the Common Shares is summarized from relevant
portions of CRIIMI MAE's Articles of Incorporation and Bylaws, as amended. A
more complete description of the Common Shares may be obtained by reference to
such documents and to the documents incorporated by reference in this
Prospectus. The following statements are qualified in their entirety by such
reference.
General. Stockholders are entitled to one vote for each Common Share held on
all matters presented for a vote to stockholders. The CRIIMI MAE Board serves
in staggered three-year terms. Directors may be removed only for cause, upon
the affirmative vote of holders of a majority of the Common Shares voting
together as a single class. Except as otherwise provided in the Articles of
Incorporation, in meetings where a quorum is present, a majority of the votes
cast by stockholders is required to adopt a provision. Stockholders are
entitled to receive all assets available for distribution to the stockholders,
subject to any preferential rights of the holders of any Preferred Shares. The
Common Shares, when issued, will be fully paid and nonassessable and will not
be subject to redemption, except as provided in the Articles of Incorporation,
nor will they have any preference, conversion, exchange, preemptive or
cumulative voting rights.
The transfer agent and register for the Common Shares is Registrar and
Transfer Company.
Restrictions on Ownership and Transfer. The Code provides that a corporation
may not qualify as a REIT if more than 50% in value of the shares of the
corporation are owned, directly or indirectly, by five or fewer individuals,
which for this purpose, includes pension funds and certain other tax-exempt
entities. Provisions of the Articles of Incorporation, intended to prevent
concentrated ownership of the capital stock of CRIIMI MAE that might
jeopardize its qualification as a REIT, authorize the CRIIMI MAE Board to
refuse to effect a transfer of shares of capital stock of CRIIMI MAE to any
person who as a result would own in excess of 9.8% of the outstanding shares
of capital stock of CRIIMI MAE ("Excess Shares") and to redeem such Excess
Shares.
CERTAIN UNITED STATES TAX CONSIDERATIONS
The following summary of certain federal income tax considerations to CRIIMI
MAE is based on current law, is for general information only, and is not tax
advice. The tax treatment of a holder of any of the Securities will vary
depending upon the terms of the specific Securities acquired by such holder,
as well as his particular situation, and this discussion does not attempt to
address any aspects of federal income taxation relating to holders of
Securities. Certain federal income tax considerations relevant to holders of
the Securities will be provided in the applicable Prospectus Supplement
relating thereto.
This discussion does not consider specific facts and circumstances that may
be relevant to a particular holder's tax position, and does not consider U.S.
state and local or non-U.S. tax consequences. Furthermore, the following
discussion is based on provisions of the Code and administrative and judicial
interpretations, all of which are subject to change, possibly on a retroactive
basis.
EACH INVESTOR IS ADVISED TO CONSULT THE APPLICABLE PROSPECTUS SUPPLEMENT, AS
WELL AS HIS OWN TAX ADVISOR, REGARDING THE TAX CONSEQUENCES
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TO HIM OF THE ACQUISITION, OWNERSHIP AND SALE OF THE SECURITIES, INCLUDING THE
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH ACQUISITION,
OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
CRIIMI MAE and CRI Liquidating have qualified, and intend to continue to
qualify, as REITs under the Code. Qualification for treatment as a REIT
requires CRIIMI MAE and CRI Liquidating each to meet certain criteria
including certain requirements regarding the nature of its ownership, assets,
income and distributions of taxable income. A REIT generally is not subject to
federal income tax on that portion of its ordinary income or capital gains
that is distributed currently to stockholders. CRIIMI MAE and CRI Liquidating
have distributed and intend to continue to distribute substantially all of
their taxable income to stockholders and to meet distribution requirements to
continue to qualify as REITs. CRIIMI MAE and CRI Liquidating will each
generally be subject to federal income tax at normal corporate rates on its
undistributed income and to a 4% excise tax under the Code on the amount, if
any, by which 85% of its REIT taxable income (including accrued but unpaid
interest income) and 95% of any net capital gain exceed the amount actually
distributed to its stockholders during the year (or declared as a dividend
during October, November or December of a calendar year, if distributed during
the following January as ordinary income dividends). Accrued income for each
quarter is generally received within 30 days after the end of the quarter.
CRIIMI MAE and CRI Liquidating are not aware of any present circumstances that
would cause them to fail to qualify as REITs, nor do they anticipate any such
circumstances in the reasonably foreseeable future. If the U.S. Internal
Revenue Service ("IRS") successfully challenged the tax status of CRIIMI MAE
or CRI Liquidating as a REIT, CRIIMI MAE and CRI Liquidating's earnings would
become subject to federal income tax (including any applicable minimum tax) at
corporate rates.
To protect CRIIMI MAE's qualification as a REIT under the Code, CRIIMI MAE's
Articles of Incorporation provide that no person or persons acting as a group
(defined to include partnerships, corporations, trusts and other entities),
with the exception of CRI or its affiliates, shall at any time directly or
indirectly acquire ownership of more than 9.8% of the outstanding shares of
CRIIMI MAE's capital stock.
PLAN OF DISTRIBUTION
CRIIMI MAE may sell Securities to or through one or more underwriters, and
also may sell Securities directly to other purchasers or through agents.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from CRIIMI MAE or from purchasers of Securities, for whom they
may act as agents, in the form of discounts, concessions, or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions, or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents. Underwriters, dealers, and agents that participate in the
distribution of Securities may be deemed to be underwriters, and any discounts
or commissions they receive from CRIIMI MAE, and any profit on the resale of
Securities they realize may be deemed to be underwriting discounts and
commissions, under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from CRIIMI MAE will be
described, in the Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each series
of Securities will be a new issue with no established trading market, other
than the Common Shares which are listed on the NYSE. Any Common Shares sold
pursuant to a Prospectus Supplement are expected to be listed on such
exchange, subject to official notice of issuance. CRIIMI MAE may elect to list
any series of Debt Securities or Preferred Shares on an exchange, but is not
obligated to do so. It is possible that one or more underwriters may make a
market in a
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series of Securities, but will not be obligated to do so and may discontinue
any market making at any time without notice. Therefore, no assurance can be
given as to the liquidity of the trading market for any Securities.
Under agreements CRIIMI MAE may enter into, underwriters, dealers, and
agents who participate in the distribution of Securities may be entitled to
indemnification by CRIIMI MAE against certain liabilities, including
liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, or be customers of, CRIIMI MAE in the ordinary course of
business.
If so indicated in the Prospectus Supplement, CRIIMI MAE will authorize
underwriters or other persons acting as CRIIMI MAE's agents to solicit offers
by certain institutions to purchase Securities from CRIIMI MAE pursuant to
contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such institutions must be
approved by CRIIMI MAE. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
LEGAL MATTERS
Certain matters relating to the validity of the Securities will be passed
upon for CRIIMI MAE by Swidler & Berlin, Chartered, Washington, D.C.
EXPERTS
The financial statements and schedules included in CRIIMI MAE's Annual
Report on Form 10-K, as amended, incorporated herein by reference, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in its reports with respect thereto, and have been incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting
and auditing.
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No dealer, salesperson or other person is authorized in connection with
any offering made hereby to give any information or to make any representation
other than those contained or incorporated by reference in this Prospectus
Supplement and the Prospectus in connection with the offer made by this
Prospectus Supplement and the Prospectus and, if given or made, such information
or representation must not be relied upon as having been authorized. This
Prospectus Supplement and the Prospectus do not constitute an offer to sell or a
solicitation of an offer to buy any security other than the securities offered
hereby, nor do they constitute an offer to sell or a solicitation of any offer
to buy any of the securities offered hereby to any person in any jurisdiction in
which it is unlawful to make such an offer or solicitation. Neither the
delivery of this Prospectus Supplement or the Prospectus nor any sale made
hereunder and thereunder shall, under any circumstances, create any implication
that there has not been any change in the information contained herein or
therein or in the affairs of CRIIMI MAE since the date hereof.
TABLE OF CONTENTS
Preliminary Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
CRIIMI MAE....................................... S-1
Recent Developments.............................. S-1
Use of Proceeds.................................. S-1
Price Range of Common Shares and Dividends....... S-1
Ratios of Earnings to Fixed Charges.............. S-2
Description of Series B Preferred Shares......... S-2
Certain United States Tax Considerations......... S-7
Underwriting..................................... S-11
Legal Matters.................................... S-12
Experts.......................................... S-12
</TABLE>
Prospectus
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information............................... 2
Incorporation of Certain Documents by Reference..... 2
CRIIMI MAE.......................................... 4
Use of Proceeds..................................... 4
Ratios of Earnings to Fixed Charges................. 4
Description of Debt Securities...................... 4
Description of Capital Stock........................ 14
Certain United States Tax Considerations............ 19
Plan of Distribution................................ 20
Legal Matters....................................... 21
Experts............................................. 21
</TABLE>
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CRIIMI MAE Inc.
2,000,000 Shares
__ % Series B Cumulative Convertible
Preferred Stock
--------------
PROSPECTUS SUPPLEMENT
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, 1996
Friedman, Billings, Ramsey & Co., Inc.
BT Securities Corporation
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