<PAGE>
This Registration Statement also constitutes Post-Effective Amendment No. 2
to Registration Statement No. 333-41373
and Post-Effective Amendment No. 5 to
Registration Statement No. 33-55583
As filed with the Securities and Exchange Commission on July 9, 1998.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act Of 1933
---------------
CRIIMI MAE Inc.
(Exact name of Registrant as specified in its charter)
Maryland 52-1622022
(State of incorporation) (I.R.S. Employer Identification No.)
William B. Dockser
Chairman of the Board
11200 Rockville Pike 11200 Rockville Pike
Rockville, Maryland 20852 Rockville, Maryland 20852
(301) 816-2300 (301) 816-2300
(Address, including zip code, and (Name, address, including
telephone number, including area code, zip code, and telephone number,
of Registrant's principal including area code, of agent
executive offices) for service)
Copy to:
Morris F. DeFeo, Jr., Esq.
Swidler & Berlin, Chartered
3000 K Street, NW, Suite 300
Washington, DC 20007
Approximate date of commencement of proposed sale to the
public: As soon as practicable on or after the effective date of this
Registration Statement.
---------------
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. / /
---------------
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /
<PAGE>
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities Amount to be Offering Price Per Aggregate Offering Registration
to be Registered Registered(1) Unit (2) Price Fee(3)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per 4,700,000 shares $14.375 $57,090,399 $17,300
share
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 429 of the Securities Act of 1933, as amended, the
Prospectus included herein also covers 728,494 shares of Common Stock from
previous Registration Statements (No.33-55583 and No.333-41373), as to
which a registration fee has previously been paid.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with the Rule 457(c) of the Securities Act of 1933, as amended,
based upon the average of the high and low prices of the Common Stock on
July 2, 1998, as reported on the New York Stock Exchange.
(3) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) of the Securities Act of 1933, as amended. The
Registrant has previously paid the registration fee for 728,494 shares of
Common Stock registered under this Registration Statement.
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
Prospectus included herein also covers 728,494 shares of Common Stock of the
Registrant registered under Registration Statement No. 33-55583 filed on
September 22, 1994, as amended by Post-Effective Amendment No. 1 filed on
September 23, 1994, Post-Effective Amendment No. 2 filed on March 1, 1996,
Post-Effective Amendment No. 3 filed on December 2, 1997 and Post-Effective
Amendment No. 4 filed on December 9, 1997 and Registration Statement No.
333-41373 filed on December 2, 1997 as amended by Post-Effective Amendment
No. 1 filed on December 9, 1997. In the event any of the previously
registered Common Stock is offered prior to the effective date of this
Registration Statement, it will not be included in any Prospectus hereunder.
The amount of Common Stock of the Registrant being registered hereby,
together with the Common Stock registered under Registration Statement No.
33-55583 and Registration Statement No. 333-41373, represents the maximum
amount of Common Stock of the Registrant which is expected to be offered for
sale.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
PROSPECTUS Subject to Completion - Dated July 8, 1998
CRIIMI MAE INC.
Dividend Reinvestment and Stock Purchase Plan
CRIIMI MAE Inc. ("CRIIMI MAE" or the "Company") hereby offers
participation in its Dividend Reinvestment and Stock Purchase Plan (the "Plan").
The Plan is designed to provide investors with a convenient and economical way
to purchase shares of CRIIMI MAE's Common Stock, par value $.01 per share
("Common Shares"), without paying any service fees, brokerage commissions or
other charges, and to reinvest all or a portion of their cash dividends in
additional Common Shares, in most cases at a discount to the market price.
Participants in the Plan and interested investors may:
- Invest by making optional cash payments at any time up to a
maximum of $10,000 per month, regardless of whether the
participants' dividends are being reinvested.
- Make an initial cash investment up to a maximum of $10,000.
- Invest by making an initial cash investment in excess of $10,000,
or optional cash payments in excess of $10,000 per month, subject
to permission of the Company, regardless of whether the
participants' dividends are being reinvested.
- Automatically reinvest cash dividends on all or a portion of
their Common Shares.
To fulfill the Plan's requirements, Common Shares may be purchased
in the open market, in privately negotiated transactions or from the Company.
Common Shares purchased in the open market or in privately negotiated
transactions will be credited to participant accounts at the average price
per share of all Common Shares purchased with respect to the relevant
Dividend Reinvestment Date or Investment Date, as applicable, less any
applicable discount. When the Company elects to make Common Shares available
for purchase under the Plan, the purchase price of the Common Shares so
purchased will be the average of the daily high and low sales prices of the
Common Shares as reported on the New York Stock Exchange (i) with respect to
Common Shares purchased with reinvested dividends, on the five Trading Days
prior to the Dividend Reinvestment Date less any discount and (ii) with
respect to Common Shares purchased with optional cash payments or initial
cash investments, on the ten Trading Days prior to the Investment Date (in
the case of optional cash payments less any discount). The price to
participants of Common Shares purchased with reinvested dividends or with
optional cash payments that do not exceed $10,000 will reflect a discount,
initially, of 2% from the market price. Common Shares purchased with optional
cash payments exceeding $10,000 (as approved by the Company) may reflect a
discount ranging from 0% to 5%. No discount will be offered on Common Shares
purchased under the Plan with initial cash investments.
The closing price of the Common Shares on July 2, 1998, as reported
on the New York Stock Exchange ("NYSE"), was $14.375 per share.
This Prospectus relates to 4,700,000 Common Shares offered for
purchase under the Plan. We suggest that you read the Prospectus carefully
and retain it for future reference.
Holders of Common Shares who do not choose to participate in the
Plan will continue to receive cash dividends, as declared, in the usual
manner.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998
<PAGE>
AVAILABLE INFORMATION
CRIIMI MAE and certain of its subsidiaries 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" or "Commission"). Reports, proxy statements and other information
filed by CRIIMI MAE can be inspected and copied at the SEC's Public Reference
Room, 450 Fifth Street, NW, Washington, D.C. 20549 and the SEC's Regional
Offices at 7 World Trade Center, 13th Floor, 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, NW, Washington, D.C. 20549, at prescribed rates. In addition,
reports, proxy material and other information concerning CRIIMI MAE may be
inspected at the NYSE, 20 Broad Street, New York, New York 10005 or reviewed
through the Commission's Electronic Data Gathering Analysis and Retrieval
System, which is publicly available through the Commission's Web Site
(http://www.sec.gov).
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 Common Shares. Statements contained in this
Prospectus 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 SEC. The Registration Statement, including
the exhibits and schedules thereto, may be inspected without charge at the
SEC's principal office at 450 Fifth Street, NW, 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 SEC.
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,
1997.
2. Quarterly Report on Form 10-Q for the quarter ended March
31, 1998.
3. Definitive Proxy Statements dated April 28, 1995 and April
6, 1993.
4. Form 8-K, as filed with the SEC on June 11, 1998.
5. Form 8-K, as filed with the SEC on May 18, 1998.
6. Form 8-A, as filed with the SEC on October 16, 1989.
7. 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 Common Shares offered hereby shall be
deemed to be incorporated by reference in this Prospectus from the date of
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
CRIIMI MAE will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, on
the written or oral request of any such person, a copy of any or all of the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference. Requests for such copies
should be directed to CRIIMI MAE's principal executive offices: CRIIMI MAE
Inc., Investor Services, 11200 Rockville Pike, Rockville, Maryland 20852, or
telephone (301) 816-2300 or toll-free (800) 266-0535.
2
<PAGE>
SUMMARY OF THE PLAN
The following is a summary of certain features of the Plan and is
qualified in its entirety by, and should be read in conjunction with, the
more detailed information appearing elsewhere in this Prospectus. Capitalized
terms that are used but not defined in this summary have the meanings given
to them in "CRIIMI MAE Inc. Dividend Reinvestment and Stock Purchase
Plan--Definitions."
The Plan provides holders of Common Shares and other investors with a
convenient and economical way to purchase Common Shares through the
reinvestment of all or a portion of their cash dividends in additional Common
Shares. There is no minimum or maximum limitation on the amount of cash
dividends a participant may reinvest under the Plan. In addition to
reinvestment of dividends, participants in the Plan may invest additional
funds through optional cash payments of not less than $100 and not more than
$10,000 per month (except in cases covered by a Request for Waiver, as
discussed below). Persons not currently holders of the Company's Common
Shares may become participants by making an initial cash investment of not
less than $500 and not more than $10,000 to purchase Common Shares through
the Plan (except in cases covered by a Request for Waiver, as described
below). For purposes of these limitations, all Plan accounts under the common
control or management of a participant may be aggregated at the Company's
sole discretion. Optional cash payments that exceed $10,000 and initial cash
investments that exceed $10,000 may be made only upon acceptance by the
Company of a completed Request for Waiver form. Participants may also make
optional cash payments by having their bank checking accounts debited
directly on a monthly basis (without charge to participants) to purchase
Common Shares through the Plan.
To fulfill Plan requirements, Common Shares may be purchased in the
open market or in privately negotiated transactions, or directly from the
Company. Common Shares purchased with reinvested dividends or with optional
cash payments that do not exceed $10,000 will be issued at a discount,
initially, of 2% to the market price of Common Shares. This discount is
subject to change from time to time or may be discontinued at the Company's
discretion, without prior notice to participants, after a review of current
market conditions, the level of participation in the Plan and the Company's
current and projected capital needs. The Company may establish a different
discount (ranging from 0% to 5%, the "Waiver Discount") regarding Common
Shares purchased from the Company with optional cash payments exceeding
$10,000 that are approved by the Company pursuant to a Request for Waiver.
CRIIMI MAE reserves the right to modify the pricing or any other provision of
the Plan at any time. No participant shall have any authority or power to
direct the time or price at which or the manner by which Common Shares may be
purchased. There will be no discount on Common Shares purchased with initial
cash investments.
Each month, at least three Trading Days prior to the first day of the
relevant Pricing Period, the Company may establish a Waiver Discount
applicable to optional cash payments exceeding $10,000 and a minimum price
(the "Threshold Price") applicable to all optional cash payments and all
initial cash investments. The Waiver Discount, which may vary each month from
0% to 5%, will be established in the Company's sole discretion after a review
of current market conditions, the level of participation in the Plan and the
Company's current and projected capital needs. The Threshold Price will apply
to Common Shares purchased through the Plan directly from the Company but
will not apply to Common Shares purchased in the open market or through
negotiated transactions. Further, the reinvestment of dividends in additional
Common Shares will not be subject to such Threshold Price, if any.
Common Shares purchased for the Plan directly from the Company with
reinvested dividends will be acquired on the relevant Dividend Reinvestment
Date at a price to participants, computed to four decimal places, obtained by
averaging the daily high and low sales price of the Common Shares on the New
York Stock Exchange on the five Trading Days immediately preceding the
relevant Dividend Reinvestment Date, less a discount of 2% (or such other
discount, if any, then in effect). Common Shares purchased for the Plan
directly from the Company with optional cash payments and initial cash
investments will be acquired on the relevant Investment Date at a price to
participants, computed to four decimal places, obtained by averaging the
daily high and low sales price of the Common Shares on the New York Stock
Exchange on the ten Trading Days immediately preceding the relevant
Investment Date, in the case of optional cash payments less any discount. In
the event that the Threshold Price is not satisfied for a Trading Day
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<PAGE>
during the Pricing Period, then such Trading Day and the trading prices for
that day will be excluded from (i) the Pricing Period and (ii) the
determination of the purchase price of the Common Shares for all Common
Shares purchased with optional cash payments and initial cash investments on
that Investment Date. Thus, for example, if the Threshold Price is not
satisfied for three of the ten Trading Days in the Pricing Period, then the
purchase price of the Common Shares purchased directly from the Company with
optional cash payments and initial cash investments on the Investment Date
will be based upon the remaining seven Trading Days for which the Threshold
Price was satisfied.
With respect to an optional cash payment that exceeds $10,000 (i.e.,
pursuant to a Request for Waiver), for each Trading Day of the related
Pricing Period on which the Threshold Price is not satisfied, one-tenth of a
participant's optional cash payment will be returned to the participant
without interest. A participant in the Plan may agree, with the Company's
consent, to waive the return of a portion of an optional cash payment made
pursuant to a Request for Waiver for one or more Trading Days for which the
Threshold Price is not satisfied. In accordance with the waiver, the portion
of the optional cash payment that would otherwise be returned to the
Participant will be invested in additional Common Shares. No part of a
participant's optional cash payment that does not exceed $10,000 or an
initial cash investment of any amount will be returned for any Trading Day of
the related Pricing Period on which the Threshold Price is not satisfied.
Rather, the full amount of the optional cash payment that does not exceed
$10,000 or initial cash investment will be used to purchase Common Shares
(excluding from the calculation of the purchase price, however, any Trading
Day on which the Threshold Price is not satisfied).
In deciding whether to approve a Request for Waiver, the Company will
consider relevant factors including, but not limited to, whether the Plan is
then acquiring newly issued or treasury shares directly from the Company or
acquiring Common Shares from third parties in the open market or in privately
negotiated transactions, the Company's needs for additional funds, the
attractiveness of obtaining such additional funds through the sale of Common
Shares as compared to other sources of funds, the purchase price likely to
apply to any sale of Common Shares under the Plan, the participant submitting
the request, the extent and nature of such participant's prior participation
in the Plan, the number of Common Shares held by such participant and the
aggregate amount of optional cash payments and initial cash investments for
which Requests for Waiver have been submitted by all participants. If such
requests are submitted for any Investment Date for an aggregate amount in
excess of the amount the Company is then willing to accept, the Company may
honor such requests in order of receipt, pro rata or by any other method that
the Company in its sole discretion determines to be appropriate.
From time to time, financial intermediaries, including brokers and
dealers, and other persons may engage in positioning transactions in order to
benefit from the discount from the market price of the Common Shares acquired
under the Plan. Such transactions may cause fluctuations in the trading
volume of the Common Shares. Financial intermediaries and such other persons
that engage in positioning transactions may be deemed to be underwriters
within the meaning of Section 2(11) of the Securities Act. The Company has no
arrangements or understandings, formal or informal, with any person relating
to the sale of Common Shares to be received pursuant to the Plan.
Subject to the availability of Common Shares registered for issuance
under the Plan, there is no total maximum number of Common Shares that can be
issued pursuant to the reinvestment of dividends and no preestablished
maximum limit applicable to optional cash payments and initial cash
investments that may be made pursuant to Requests for Waiver. As of the date
hereof, 4,700,000 Common Shares have been registered and are available for
sale under the Plan.
Participants in the Plan will pay no commissions or brokerage fees on
open market purchases of Common Shares made in connection with dividend
reinvestments, optional cash payments and initial cash investments. All costs
of administering the Plan and all fees, commissions and expenses incurred in
connection with any open market purchases made pursuant to the Plan will be
paid by CRIIMI MAE.
If a participant wishes to sell Common Shares held in the Plan, the
participant may elect to have such Common Shares sold through the Plan.
Common Shares sold through the Plan will be effected by the Agent through a
registered broker-dealer and will be subject to an administrative charge of
$10.00, applicable brokerage fees and commissions and transfer taxes, if any.
A participant that wishes to sell Common Shares held in the Plan other than
through the Plan may
4
<PAGE>
request that the Agent deliver a certificate for such Common Shares to the
participant, which the participant may then sell through his or her
registered broker-dealer.
Participants in the Plan who reinvest dividends will be treated for
federal income tax purposes as having received a dividend (to the extent the
Company has current or accumulated earnings and profits) equal to (i) in the
case of Common Shares purchased from the Company, the fair market value of
Common Shares received, and (ii) in the case of Common Shares purchased on
the open market, the amount of cash provided by the Company to purchase the
Common Shares plus the amount of any brokerage commissions paid by the
Company with respect to the Common Shares, without receiving cash to pay any
tax payment obligation which arises as a result of such dividend.
Participants in the Plan who make optional cash payments will be treated for
federal income tax purposes as having received a dividend equal to the excess
of the fair market value on the Investment Date of such Common Shares over
the amount of the optional cash payment made by the participant. Participants
will not be able to control the specific timing of optional cash payments,
initial cash investments and sales of Common Shares under the Plan. The
market discount for purchases of Common Shares may change from time to time
or may be eliminated at any time. See "CRIIMI MAE Inc. Dividend Reinvestment
and Stock Purchase Plan-- Disadvantages."
5
<PAGE>
CRIIMI MAE
CRIIMI MAE is a full service commercial mortgage company structured as
a self-administered real estate investment trust ("REIT"). CRIIMI MAE
specializes in the acquisition, origination, securitization and servicing of
multifamily and commercial mortgages and mortgage-related assets throughout
the United States.
CRIIMI MAE INC. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The following is a complete statement of the Plan.
Purpose
The purpose of the Plan is to provide holders of CRIIMI MAE's Common
Shares and other investors with a convenient and economical way to purchase
Common Shares and to reinvest all or a portion of their cash dividends in
additional Common Shares.
The Plan may also have the effect of raising additional capital through
the direct sale of Common Shares by the Company. These sales may be effected,
in part, through the Company's approval from time to time, in its sole
discretion, of Requests for Waiver regarding the limitations applicable to
the initial cash investment and optional cash payment features of the Plan.
Definitions
The following is a list of certain capitalized terms and their meanings
for purposes of this Prospectus.
- Agent means Registrar and Transfer Company, the Company's agent and
administrator for the Plan. Beneficial Owner means a holder of
Common Shares who beneficially owns Common Shares that are registered
in a name other than such holder's name (for example, where Common
Shares are held in the name of a broker, bank or other nominee).
- Dividend Reinvestment Date means the first Trading Day after the date
on which the Company pays quarterly dividends. Dividends on Common
Shares have historically been paid on the last Trading Day of each
quarter ended March 31, June 30, September 30 and December 31.
- Holder of Record means a holder of Common Shares who owns Common
Shares in his or her own name.
- Investment Date means for all optional cash payments and initial
cash investments, including optional cash payments and initial cash
investment exceeding $10,000, the eleventh Trading Day after the
commencement of the Pricing Period each month. Please see Schedule A
for a list of the Investment Dates for each month through the month
ending December 31, 1999.
- Pricing Period means, (i) with respect to optional cash payments and
initial cash investments, the period encompassing the ten Trading Days
immediately preceding the relevant Investment Date and (ii) with
respect to the reinvestment of cash dividends, the period encompassing
the five Trading Days immediately preceding the relevant Dividend
Reinvestment Date.
- Threshold Price means the stated dollar amount that the average of
the high and low sales price of the Common Shares on the New York
Stock Exchange for a Trading Day in a Pricing Period must equal or
exceed in order to be included in the calculation of the purchase
price for newly issued Common Shares acquired from the Company. With
respect to initial cash investments and optional cash payments (in
each case regardless of dollar amount), if the Threshold Price is not
satisfied for a Trading Day in the Pricing Period, then the high and
low sales price for that Trading Day will be excluded from the
calculation of the purchase price of Common Shares. See "--Source and
Price of Common Shares" below.
- Trading Day means a day on which trades of the Common Shares are
reported on the NYSE.
6
<PAGE>
Advantages
- Common Shares purchased under the Plan with reinvested dividends and
optional cash payments that do not exceed $10,000, whether purchased
in the open market or directly from the Company, will be issued
commission free and at a discount, initially, of 2% to the market
price. If it is determined that Common Shares to be purchased under
the Plan will be made in the open market instead of directly from the
Company, participants will not pay any brokerage fees or commissions
on open market purchases or in privately negotiated purchases of
Common Shares.
- In addition to reinvestment of dividends, participants may invest
additional funds in Common Shares through optional cash payments of
not less than $100 and not more than $10,000 per month, unless a
Request for Waiver is approved by the Company. Optional cash payments
may be made by sending to the Agent a check or money order payable to
"Registrar and Transfer Company." Optional cash payments may be made
occasionally or at regular intervals, as the participant desires.
Participants may also make optional cash payments by having their bank
checking accounts debited directly, without paying a fee, on a monthly
basis to purchase Common Shares through the Plan. Participants may
make optional cash payments even if dividends on their Common Shares
are not being reinvested.
- Persons not currently holders of Common Shares may become participants
by making an initial cash investment of not less than $500 and not
more than $10,000, or a greater amount if a Request for Waiver is
approved by the Company, to purchase Common Shares under the Plan.
- Funds invested in the Plan for Holders of Record are fully invested
through the purchase of fractions of Common Shares, as well as full
Common Shares, and proportionate cash dividends on fractions of Common
Shares are used to purchase additional Common Shares. See
"--Participation Option" for a discussion of fractional shares owned
by Beneficial Owners.
- A participant may make a gift, at any time and at a nominal cost to
the participant, of all or a portion of the Common Shares held in the
Plan in the name of the participant to a Plan account for another
person by instructing the Agent of the request and enclosing a check
for the processing fee made payable to the Agent.
- The Plan offers a "share safekeeping" service whereby participants may
deposit their Common Share certificates with the Agent and have their
ownership of such Common Shares maintained on the Agent's records as
part of their Plan accounts. Participants will not be charged a fee
for this service.
- Participants will not pay any service fees, brokerage commissions or
other charges in connection with purchases of Common Shares under the
Plan.
Disadvantages
- Participants in the Plan who reinvest dividends will be treated for
federal income tax purposes as having received a dividend on the
dividend payment date. In addition, participants in the Plan who make
optional cash payments will be treated for federal income tax purposes
as having received a dividend at the time they receive Common Shares
purchased with such optional cash payments to the extent of any
discount received as a result of such optional cash payments. Such
dividends may give rise to a tax payment obligation without providing
the participant with immediate cash to pay such tax when it becomes
due. See "Certain United States Federal Income Tax Considerations."
- Participants will not be able to control the specific timing of
purchases and sales of Common Shares under the Plan. Because purchases
under the Plan will be made no earlier than eleven Trading Days
following receipt of an investment instruction, and because sales
under the Plan will be effected by the Agent through a registered
broker-dealer only as soon as practicable after the Agent receives
such instructions, a participant may be unable to achieve the same
level of control over purchase and sale timing that he or she might
have regarding investments made outside the Plan.
- The Company may, without prior notice to participants, change or
eliminate the discount on Common Shares to be purchased through the
Plan pursuant to the dividend reinvestment and optional cash payment
features. As a result, participants will generally be unable to depend
on the availability of a market discount regarding
7
<PAGE>
Common Shares acquired through the Plan.
- No interest will be paid by the Company or the Agent to a participant
on dividends, initial cash investments or optional cash payments held
pending reinvestment or investment or to be returned to the
participant. In addition, optional cash payments exceeding $10,000 per
month may be subject to return to the participant, in whole or
proportionate part, unless waived by the Company and the participant,
without interest in the event that (i) a Threshold Price has been
established with respect to Common Shares to be purchased from the
Company and (ii) such Threshold Price is not met for a Trading Day
during the related Pricing Period.
- With respect to optional cash payments exceeding $10,000, while the
Plan allows the Company to establish a discount from the average
market price of the Common Shares during the Pricing Period, there can
be no assurance that such average market price, as so discounted, will
equal or exceed the market price of the Common Shares on the relevant
Investment Date. Similarly, there can be no assurance that the average
market price of Common Shares purchased with optional cash payments
that do not exceed $10,000, less any discount (initially 2%), will
equal or exceed the market price of the Common Shares on the relevant
Investment Date.
Administration
CRIIMI MAE has retained Registrar and Transfer Company as plan
administrator and agent (the "Agent") to administer the Plan, keep records,
send statements of account activity to each participant and perform other
duties relating to the Plan. Common Shares purchased under the Plan and held
by the Agent will be registered in the Agent's name or the name of its
nominee for the benefit of the participants. If the Agent resigns or
otherwise ceases to act as plan administrator and agent, the Company will
appoint a new plan administrator and agent to administer the Plan.
Questions regarding the Plan may be directed to the Agent either by
phone at (800) 998-9151 or in writing to the following address:
Registrar and Transfer Company
Attention: CRIIMI MAE Dividend Reinvestment and Stock Purchase Plan
10 Commerce Drive
Cranford, New Jersey 07016
Participation
Participation in the Plan is open to any person or entity, whether or
not a holder of Common Shares, provided that such person or entity fulfills the
prerequisites for participation described below under "Enrollment Procedures." A
holder of Common Shares who owns the Common Shares in his or her own name is
referred to herein as a "Holder of Record." A Holder of Record may participate
directly in the Plan. A holder of the Common Shares who beneficially owns Common
Shares that are registered in a name other than such holder's name (for example,
where Common Shares are held in the name of a broker, bank or other nominee) is
referred to herein as a "Beneficial Owner." A Beneficial Owner may participate
in the Plan by either (i) becoming a Holder of Record by having one or more
Common Shares transferred into such holder's own name or (ii) coordinating such
holder's participation with his or her broker, bank or other nominee who is the
record holder to participate on such holder's behalf. A prospective investor who
holds no Common Shares may participate, at his or her option, either directly or
through a broker, bank or other nominee. See "--Enrollment Procedures" below.
The Plan is intended for the benefit of investors in CRIIMI MAE and not
for persons or entities who accumulate accounts under the Plan over which they
have control for the purpose of exceeding the $10,000 per month maximum without
seeking the advance approval of the Company or who engage in transactions that
cause or are designed to cause aberrations in the price or trading volume of the
Common Shares. Notwithstanding anything in the Plan to the contrary, CRIIMI MAE
reserves the right to exclude from participation in the Plan, at any time, (i)
persons or entities who attempt to circumvent the Plan's standard $10,000 per
month maximum by accumulating accounts over which they have control
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or (ii) any other persons or entities, as determined in the sole discretion
of the Company.
Participants currently enrolled in the CRIIMI MAE Inc. Dividend
Reinvestment and Stock Purchase Plan, the predecessor to the Plan, will
automatically be enrolled in the Plan. Participants currently enrolled in the
CRIIMI MAE Inc. Dividend Reinvestment and Stock Purchase Plan who do not wish
to enroll in the Plan may withdraw from the Plan by sending written notice to
the Agent. See "--Withdrawal."
Previous Sales Under the Plan
Under the CRIIMI MAE Inc. Dividend Reinvestment and Stock Purchase
Plans in effect from August 1990 until the adoption of this Plan by the
Company's board of directors, the Company issued 2,668,869 Common Shares. A
total of 1,983,474 Common Shares were issued pursuant to the initial cash
investment and optional cash payment features of all such predecessor plans.
Enrollment Procedures
After being furnished a copy of this Prospectus:
(a) Holders of Record may become participants by delivering a
completed Enrollment Form to the Agent. Participants currently enrolled
in the CRIIMI MAE Inc. Dividend Reinvestment and Stock Purchase Plan
need not do anything to continue their participation in the Plan.
(b) Beneficial Owners are eligible to participate in the reinvestment
of dividends. However, Beneficial Owners must instruct their broker,
bank or other nominee who is a Depository Trust Company ("DTC")
participant to participate on their behalf in the Plan. See "--Broker
and Nominee Form."
(c) Interested persons not currently holders of Common Shares may
become participants by (i) directly delivering a completed Enrollment
Form to the Agent or (ii) instructing their broker, bank or other
nominee to deliver a completed and signed Enrollment Form to the Agent
together with an initial cash investment of not less than $500 and not
more than $10,000; provided, that initial cash investments of more than
$10,000 may be made if a Request for Waiver therefor is approved by the
Company.
Enrollment Forms will be processed as promptly as practicable.
Participation in the Plan will begin after the properly completed Enrollment
Form has been reviewed and accepted by the Agent (and, in cases of initial
cash investments exceeding $10,000, a properly completed Request for Wavier
form has been reviewed and accepted by the Company).
Participation Option
The Enrollment Form appoints the Agent as agent for the participants
and directs the Company to pay to the Agent such participants' cash dividends
on all or a specified number of Common Shares owned by the participants
("Participating Shares"), as well as on all whole and fractional Common
Shares credited to participants' Plan accounts ("Plan Shares"). The
Enrollment Form directs the Agent to purchase, on the Dividend Reinvestment
Date, additional Common Shares with such dividends. The Enrollment Form also
directs the Agent to purchase on the relevant Investment Date additional
Common Shares with optional cash payments and initial cash investments of not
more than $10,000, if any, made by Holders of Record. See "--Cash Investments
Exceeding $10,000" below for a discussion of the requirements for optional
cash payments and initial cash investments exceeding $10,000. See "--Broker
and Nominee Form" below for a discussion of the requirements for optional
cash payments of a Beneficial Owner, and initial cash investments of an
investor who is not currently a holder of Common Shares, whose broker, bank
or other nominee holds or will hold such person's Common Shares. The
Enrollment Form also directs the Agent to automatically reinvest all
subsequent dividends on Plan Shares. Dividends will continue to be reinvested
until the participant specifies
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<PAGE>
otherwise by contacting the Agent, withdraws from the Plan or the Plan is
terminated.
The Enrollment Form provides for the purchase of additional Common
Shares through the following investment options:
(a) Full Dividend Reinvestment--The Agent will apply any cash
dividends on all Common Shares held in certificate form by the
participant and all cash dividends on Plan Shares, together with any
optional cash payments or initial cash investment, toward the purchase
of additional Common Shares.
(b) Partial Dividend Reinvestment--The Agent will apply cash dividends
on Common Shares held in certificate form by the participant and
specified on the Enrollment Form, and all cash dividends on Plan Shares,
together with any optional cash payments or initial cash investment,
toward the purchase of additional Common Shares.
(c) Optional Cash Payment and Initial Cash Investment Only--The
participant will continue to receive cash dividends on Common Shares
held in certificate form by the participant in the usual manner.
However, the Agent will apply all cash dividends on all Plan Shares,
together with any optional cash payments or initial cash investment
received from the participant, toward the purchase of additional Common
Shares.
Each participant may select any one of these three options. In each
case, dividends will be reinvested on all Participating Shares and on all
Plan Shares held in the Plan account, including dividends on Common Shares
purchased with any optional cash payments or initial cash investment, until a
participant specifies otherwise by contacting the Agent, or withdraws from
the Plan altogether, or until the Plan is terminated. If a participant would
prefer to receive cash payments of dividends on Plan Shares rather than
reinvest such dividends, those Common Shares must be withdrawn from the Plan
by written notification to the Agent. See "--Withdrawal" below.
Beneficial Owners may have their dividends reinvested in additional
Common Shares if the Beneficial Owner's broker, bank or other nominee is a
DTC participant. The Beneficial Owner should instruct his or her broker, bank
or other nominee to provide instructions to DTC to reinvest all or a portion
of his or her cash dividends. Common Shares issued as a result of reinvested
dividends pursuant to a request by a Beneficial Owner will be in certificated
form. A Beneficial Owner can make optional cash payments or an initial cash
investment by instructing his or her broker, bank or other nominee to
complete a Broker and Nominee Form and transmit funds to the Agent. A
Beneficial Owner that wishes to purchase Common Shares by making an optional
cash payment or initial cash investment through a broker, bank or other
nominee may not receive fractions of Common Shares, in which event uninvested
cash will be returned via check to the broker, bank or other nominee on
behalf of the Beneficial Owner. See "--Broker and Nominee Form" below.
The Enrollment Form also permits a participant to authorize automatic
deductions from his or her personal bank checking account. If this option is
selected, the Agent will automatically deduct from the participant's
designated bank account the amount indicated on the Enrollment Form (not less
than $100 or more than $10,000 per month) on or about the fifteenth day of
each month.
A participant may change his or her investment option at any time by
completing a new Enrollment Form and returning it to the Agent.
Broker and Nominee Form
The Broker and Nominee Form provides the only means by which a
broker, bank or other nominee holding Common Shares on behalf of a Beneficial
Owner, or planning to hold Common Shares on behalf of an interested investor
who is not currently a holder of Common Shares, may make optional cash
payments or an initial cash investment within the minimum and maximum
investment limitations established for the Plan (see "--Optional Cash
10
<PAGE>
Payments and Initial Cash Investments" below) on behalf of such Beneficial
Owner or interested investor. A Broker and Nominee Form must be delivered to
the Agent each time such broker, bank or other nominee transmits optional
cash payments or an initial cash investment. Broker and Nominee Forms will be
furnished at any time upon request to the Agent.
The Broker and Nominee Form and appropriate instructions must be
received by the Agent not later than 12:00 p.m. (noon) Eastern time on the
Trading Day immediately preceding the commencement of the relevant Pricing
Period in order to be invested on the Investment Date, otherwise the optional
cash payment or initial cash investment will be returned, without interest.
Common Shares issued pursuant to a properly completed Broker and
Nominee Form will not be deemed Plan Shares. Therefore, subsequent dividends
will be paid in cash unless otherwise instructed by the Beneficial Owner. See
"--Enrollment Procedures" above for a discussion of the requirements for a
Beneficial Owner participating in the reinvestment of dividends.
Reinvestment of Cash Dividends
A participant may elect to reinvest cash dividends paid on all or a
portion of the Common Shares held in certificate form by the participant by
designating his or her election on the Enrollment Form. Reinvestment levels
may be changed from time to time as a participant desires by submitting a new
election to the Agent on a properly completed Enrollment Form. To be
effective with respect to a particular dividend payment date, any change in
the reinvestment election must be received by the Agent no later than three
Trading Days before the record date for such dividend. The record date is
usually about ten days prior to the dividend payment date.
Dividends on Common Shares are expected to be paid on the last
Trading Day of each quarter ended March 31, June 30, September 30 and
December 31. The reinvestment of dividends will generally begin on the
Dividend Reinvestment Date and will normally extend over a period of two to
five Trading Days in the case of open market purchases. Newly issued Common
Shares will be purchased from CRIIMI MAE on the Dividend Reinvestment Date.
If the participant has specified partial reinvestment of dividends or
optional cash payment or initial cash investment only, the portion of such
dividend payment not being reinvested will be sent to the participant by
check in the usual manner.
Optional Cash Payments and Initial Cash Investments
Participants in the Plan may make optional cash payments by personal
check or money order made payable to "Registrar and Transfer Company." An
optional cash payment may also be made by a broker, bank or other nominee
acting on behalf of a Beneficial Owner. Optional cash payments must be at
least $100 for any single investment and may not exceed $10,000 per month.
(For purposes of these limitations, all Plan accounts under the common
control or management of a participant may be aggregated, at the Company's
sole discretion). Optional cash payments exceeding $10,000 per month may be
made only upon acceptance by CRIIMI MAE of a properly completed Request for
Waiver form. See "--Cash Investments Exceeding $10,000" below. There is no
obligation to make an optional cash payment at any time, and the amount of
such payments may vary from time to time. Participants may also make optional
cash payments by arranging to have their bank checking accounts debited
directly on a monthly basis to have Common Shares purchased through the Plan.
To initiate direct debiting, a participant must complete the "Automatic Cash
Investment" portion of the Enrollment Form and return to the Agent the
Enrollment Form and a voided check on the account the participant wishes to
be debited. Debits to participants' accounts will be processed on or about
the fifteenth day of each month, but will not commence until the month
following the Agent's receipt of the completed Enrollment Form and voided
check. The minimum monthly account debit is $100 and the maximum is $10,000.
Participants will not be charged a fee in connection with making optional
cash payments by direct debit. Cash contributions may not be accepted by the
Agent if a participant imposes any restrictions with respect to the number of
Common Shares to be purchased, the price at which the Common Shares are to be
purchased or the timing of the purchase.
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An interested person not currently a holder of Common Shares may
become a participant by directly enrolling in the Plan by delivering a
completed Enrollment Form to the Agent and making an initial cash investment
in the form of a personal check or money order payable to "Registrar and
Transfer Company." An interested person not currently a holder of Common
Shares and not wanting to enroll directly in the Plan must instruct his or
her broker, bank or other nominee to complete a Broker and Nominee Form and
transmit the initial cash investment to the Agent. Initial cash investments
must be at least $500 and may not exceed $10,000 (without the prior approval
of the Company pursuant to a Request for Waiver). (For purposes of these
limitations, all Plan accounts under the common control or management of a
participant may be aggregated, at CRIIMI MAE's sole discretion). Initial cash
investments exceeding $10,000 per month may be made only upon acceptance by
the Company of a properly completed Request for Waiver form.
Optional cash payments and initial cash investments that do not
exceed $10,000 must be received by the Agent no later than 12:00 p.m. (noon)
Eastern time on the Trading Day immediately preceding the commencement of the
relevant Pricing Period, and any payment in the form of check or money order
must have cleared on or before the Investment Date in order to be invested on
the Investment Date. Optional cash payments and initial cash investments that
are received or cleared after such time will be returned to the participant,
without interest. OPTIONAL CASH PAYMENTS AND INITIAL CASH INVESTMENTS
EXCEEDING $10,000 MUST BE RECEIVED (TOGETHER WITH A COMPLETED REQUEST FOR
WAIVER FORM) BY THE AGENT IN GOOD FUNDS NOT LATER THAN 12:00 P.M. (NOON)
EASTERN TIME ON THE TRADING DAY IMMEDIATELY PRECEDING THE COMMENCEMENT OF THE
RELEVANT PRICING PERIOD IN ORDER FOR SUCH FUNDS TO BE INVESTED ON THE RELATED
INVESTMENT DATE. Upon a participant's written request received by the Agent
no later than two Trading Days prior to the Pricing Period, a timely optional
cash payment or initial cash investment not already invested under the Plan
will be canceled or returned to the participant, as appropriate. However, in
such latter event, no refund of a check or money order will be made until the
funds have been actually received by the Agent. Accordingly, such refunds may
be delayed by up to three weeks.
The Agent will establish an escrow account for the deposit of
optional cash payments that exceed $10,000 and initial cash investments that
exceed $10,000 pending their investment in Common Shares. Interest that
accrues on funds deposited in the escrow account pending their investment on
the relevant Investment Date will be paid to CRIIMI MAE. No interest will be
paid to CRIIMI MAE from funds deposited with the Agent in connection with
optional cash payments not exceeding $10,000 and initial cash investments not
exceeding $10,000. No interest will be paid to participants on amounts held
by the Agent pending investment or to be returned to the participant. All
optional cash payments and initial cash payments are subject to collection by
the Agent for full face value in U.S. funds.
The Agent will apply the optional cash payment or initial cash
payment received from a participant to the purchase of Common Shares for the
account of the participant on the relevant Investment Date. See "--Source and
Price of Shares" and "--Cash Investments Exceeding $10,000" below. See
Schedule A for a list of Investment Dates.
Source and Price of Common Shares
Source
To fulfill the Plan's requirements, the Agent may purchase or sell
Common Shares in the open market or in privately negotiated transactions
subject to such terms and conditions, including price and delivery, as the
Agent may accept. The Agent may also purchase Common Shares from CRIIMI MAE,
to the extent CRIIMI MAE makes Common Shares available. The Agent may
commingle each participant's funds with those of other participants for the
purpose of executing purchases.
For open market purchases in connection with optional cash payments
and initial cash investments, Common Shares purchased by the Agent will be
acquired through open market transactions conducted by a registered
broker-dealer commencing on the first Trading Day that follows the end of the
Pricing Period; open market purchases will typically extend over two to five
Trading Days. Newly issued Common Shares acquired with optional cash payments
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<PAGE>
and initial cash investments will be purchased from CRIIMI MAE on the
Investment Date.
Dividend and voting rights on Common Shares purchased in the open
market will commence upon settlement, which is normally three Trading Days
after purchase. However, Common Shares purchased in the open market within a
period of three Trading Days prior to and including a dividend record date
are considered purchased "ex-dividend" and therefore are not entitled to
payment of that dividend.
Price
Reinvested Dividends. Common Shares purchased in the open market
pursuant to the reinvestment of dividends will be credited to participants'
accounts at the weighted average price per share of all Common Shares
purchased with respect to the relevant Dividend Reinvestment Date less a
discount, initially, of 2%. Common Shares purchased for the Plan directly
from CRIIMI MAE will be acquired on the Dividend Reinvestment Date at a price
to participants, computed to four decimal places, obtained by averaging the
daily high and low sales price of the Common Shares as reported on the New
York Stock Exchange on the five Trading Days immediately preceding the
Dividend Reinvestment Date and subtracting from such average a discount,
initially, of 2%.
Optional Cash Payments That Do Not Exceed $10,000. Common Shares
purchased in the open market with optional cash payments that do not exceed
$10,000 will be credited to participants' accounts at the weighted average
price per share of all Common Shares purchased with respect to the relevant
Investment Date, less a discount, initially, of 2%. Common Shares purchased
for the Plan directly from CRIIMI MAE with optional cash payments that do not
exceed $10,000 will be acquired on the relevant Investment Date at a price to
participants, computed to four decimal places, obtained by (i) averaging the
daily high and low sales price of the Common Shares on the New York Stock
Exchange on the Trading Days during the Pricing Period immediately preceding
the relevant Investment Date on which the Threshold Price, if any, is
satisfied and (ii) subtracting from such average a discount, initially, of
2%. See "--Cash Investments Exceeding $10,000--Waiver Discount and Threshold
Price" for a discussion of the price of and discount for Common Shares
purchased with optional cash payments that exceed $10,000.
Initial Cash Investments. Common Shares purchased in the open
market with initial cash investments will be credited to participants'
accounts at the weighted average price per share of all Common Shares
purchased with respect to the relevant Investment Date. Common Shares
purchased for the Plan directly from CRIIMI MAE with initial cash investments
will be acquired on the relevant Investment Date at a price to participants,
computed to four decimal places, obtained by averaging the daily high and low
sales price of the Common Shares on the New York Stock Exchange on the
Trading Days during the relevant Pricing Period on which the Threshold Price,
if any, is satisfied. There is no discount for Common Shares purchased in the
open market or directly from the Company with initial cash investments.
Threshold Price. Notwithstanding anything contained herein to the
contrary, CRIIMI MAE may establish for each Pricing Period a Threshold Price
applicable to the purchase of newly issued Common Shares purchased through
optional cash payments and initial cash investments. The Threshold Price, if
any, will be established by the Company, in its sole discretion, at least
three Trading Days prior to the first day of the Pricing Period based upon a
review of current market conditions and other relevant factors. Participants
may obtain the applicable Threshold Price by telephoning the Company at (800)
266-0535 and requesting "CRIIMI MAE Investor Services." The Threshold Price
will be a stated dollar amount that the average of the high and low sales
price of the Common Shares on the New York Stock Exchange for a Trading Day
of the Pricing Period must equal or exceed in order to be included in the
calculation of the purchase price for newly issued Common Shares acquired
from CRIIMI MAE. In the event that such Threshold Price is not satisfied for
a Trading Day of the Pricing Period, then such Trading Day and the trading
prices of the Common Shares for that day will be excluded from (i) the
Pricing Period and (ii) the determination of the purchase price of the Common
Shares for all optional cash payments and initial cash investments. Thus, for
example, if the Threshold Price is not satisfied for three of the ten Trading
Days in the Pricing Period, then the purchase price of the Common Shares will
be based upon the remaining seven Trading Days for which the Threshold Price
was satisfied.
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No portion of any optional cash payment that does not exceed $10,000,
and no portion of any initial cash investment, will be returned to
participants for any Trading Day of a Pricing Period for which the Threshold
Price is not satisfied.
See Schedule A for a list of Investment Dates and associated optional
cash payment and initial cash investment due dates and Pricing Periods.
The discount for purchases of Common Shares with optional cash
payments that do not exceed $10,000 and reinvested dividends will initially
be 2% but may be changed or eliminated by CRIIMI MAE, without prior notice to
participants, at any time.
Cash Investments Exceeding $10,000
Request for Waiver
Initial cash investments in excess of $10,000 and optional cash
payments in excess of $10,000 per month may be made only pursuant to a
written Request for Waiver accepted in writing by CRIIMI MAE. A Request for
Waiver must be received by CRIIMI MAE at its corporate address or via
facsimile at (301) 231-0334 no later than 12:00 p.m. (noon) Eastern time on
the third Trading Day preceding the relevant Pricing Period. Request for
Waiver forms may be obtained by calling the Company at (800) 266-0535 and
requesting "CRIIMI MAE Investor Services." It is solely within CRIIMI MAE's
discretion as to whether any such approval for initial cash investments in
excess of $10,000 or optional cash payments in excess of $10,000 will be
granted. In deciding whether to approve a Request for Waiver, CRIIMI MAE will
consider relevant factors including, but not limited to, whether the Plan is
then acquiring newly issued or treasury shares directly from the Company or
acquiring Common Shares from third parties in the open market or in privately
negotiated transactions, the Company's need for additional funds, the
attractiveness of obtaining such additional funds through the sale of Common
Shares as compared to other sources of funds, the purchase price likely to
apply to any sale of Common Shares under the Plan, the participant submitting
the request, the extent and nature of such participant's prior participation
in the Plan, the number of Common Shares held by such participant and the
aggregate amount of cash investments for which Requests for Waiver have been
submitted by all participants. If such requests are submitted for any
Investment Date for an aggregate amount in excess of the amount CRIIMI MAE is
then willing to accept, CRIIMI MAE may honor such requests in order of
receipt, pro rata or by any other method that CRIIMI MAE determines in its
sole discretion to be appropriate.
The Company anticipates that it will respond to each Request for
Waiver by the close of business (5:00 p.m. Eastern time) on the second
Trading Day preceding the relevant Pricing Period. GOOD FUNDS ON ALL APPROVED
REQUESTS FOR WAIVER MUST BE RECEIVED BY THE AGENT NOT LATER THAN 12:00 P.M.
(NOON) EASTERN TIME ON THE TRADING DAY IMMEDIATELY PRECEDING THE COMMENCEMENT
OF THE RELEVANT PRICING PERIOD IN ORDER FOR SUCH FUNDS TO BE INVESTED ON THE
RELEVANT INVESTMENT DATE. A participant who has delivered an optional cash
payment in excess of $10,000 or an initial cash investment in excess of
$10,000 to the Agent may request the return of such optional cash payment or
initial cash payment at any time prior to the second Trading Day immediately
preceding the commencement of the relevant Pricing Period.
The Agent will establish an escrow account for the deposit of
optional cash payments that exceed $10,000 and initial cash investments that
exceed $10,000 pending their investment in Common Shares. Interest that
accrues on funds deposited in the escrow account pending their investment on
the Investment Date will be paid to CRIIMI MAE.
See "--Plan of Distribution; Expenses" below; also see Schedule A for a
list of important dates applicable to the Request for Waiver.
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Purchase Price
Common Shares purchased in connection with approved Requests for
Waiver in open market purchases or directly from the Company will be acquired
on the Investment Date at a price to participants, computed to four decimal
places, obtained by (i) averaging the daily high and low sales price of the
Common Shares on the New York Stock Exchange on the Trading Days during the
related Pricing Period on which the Threshold Price, if any, is satisfied and
(ii) subtracting from such average the Waiver Discount, if any, applicable to
such Common Shares. See "--Waiver Discount and Threshold Price" below. Only
Common Shares purchased with optional cash payments that exceed $10,000
(pursuant to an approved Request for Waiver) will receive the Waiver
Discount, if any. The purchase price to participants of Common Shares
purchased with initial cash investments that exceed $10,000 will not be
reduced by the Waiver Discount.
Waiver Discount and Threshold Price
Each month, at least three Trading Days prior to the first day of the
Pricing Period, the Company may establish a Waiver Discount applicable to
optional cash payments exceeding $10,000. The Waiver Discount, which may vary
each month from 0% to 5%, will be established in the Company's sole
discretion after a review of current market conditions, the level of
participation in the Plan and current and projected capital needs of the
Company. The Waiver Discount will apply both to Common Shares purchased
directly from the Company and Common Shares acquired in open market purchases
or in negotiated transactions.
Notwithstanding anything contained herein to the contrary, CRIIMI MAE
may establish for each Pricing Period a Threshold Price applicable to the
purchase of newly issued Common Shares purchased through optional cash
payments and initial cash investments. This Threshold Price, if any, will be
established by the Company, in its sole discretion, at least three Trading
Days prior to the first day of the Pricing Period based upon a review of
current market conditions and other relevant factors. The Threshold Price
will be a stated dollar amount that the average of the high and low sales
price of the Common Shares on the New York Stock Exchange for a Trading Day
of the Pricing Period must equal or exceed in order to be included in the
calculation of the purchase price for newly issued Common Shares acquired
from the Company. In the event that such Threshold Price is not satisfied for
a Trading Day of the Pricing Period, then such Trading Day and the trading
prices of the Common Shares for that day will be excluded from (i) the
Pricing Period and (ii) the determination of the purchase price of the Common
Shares for all optional cash payments and initial cash investments. Thus, for
example, if the Threshold Price is not satisfied for three of the ten Trading
Days, then the purchase price of the Common Shares will be based upon the
remaining seven Trading Days for which the Threshold Price was satisfied.
Each Trading Day of a Pricing Period for which the Threshold Price is
not satisfied will cause the return of a portion of any optional cash
payments made pursuant to Requests for Waiver approved by the Company. The
returned amount will equal one-tenth of such optional cash payments for each
Trading Day that the Threshold Price is not satisfied. Thus, for example, if
the Threshold Price is not satisfied for three Trading Days, then 3/10 (i.e.,
30%) of such optional cash payments will be returned without interest. A
participant in the Plan may agree, with the Company's consent, to waive the
return of a portion of an optional cash payment made pursuant to a Request
for Waiver for one or more Trading Days for which the Threshold Price is not
satisfied. In accordance with the waiver, the portion of the optional cash
payment that would otherwise be returned to the Participant will be invested
in additional Common Shares.
The Threshold Price applies to all optional cash payments and initial
cash investments. The return procedure discussed above applies only to
optional cash payments made pursuant to Requests for Waiver approved by the
Company and not to the reinvestment of dividends, optional cash payments that
do not exceed $10,000 or initial cash investments.
Participants may obtain the applicable Waiver Discount and Threshold
Price by telephoning the Company at (800) 266-0535 and requesting "CRIIMI MAE
Investor Services."
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Any person who acquires Common Shares through the Plan and resells
them shortly before or after acquiring them may be considered to be an
underwriter within the meaning of the Securities Act. The Company expects
that certain persons will acquire Common Shares pursuant to a Request for
Waiver and resell such Common Shares in order to obtain the financial benefit
of any Waiver Discount then being offered under the Plan. The Company has no
arrangements or understandings, informal or formal, with any person relating
to a distribution of Common Shares to be received pursuant to the Plan.
Investment Date
The Plan's "Investment Date" for all optional cash payments and
initial cash investments, including cash investments exceeding $10,000, is
the eleventh Trading Day after the commencement of the Pricing Period each
month. See Schedule A for a list of Investment Dates and associated optional
cash payment and initial cash investment due dates and Pricing Periods.
Ways to Make Investments
Personal Check or Money Order
Optional cash payments that do not exceed $10,000 and initial cash
investments that do not exceed $10,000 may be made by personal check or money
order payable in U.S. dollars to "Registrar and Transfer Company." Optional
cash payments mailed to the Agent should include the Optional Cash Payment
Form attached to the quarterly statement of account sent to participants or
available upon request from the Agent or CRIIMI MAE.
Automatic Investment from a Bank Account
Participants may also make optional cash payments by arranging to
have their bank checking accounts debited directly on a monthly basis to have
Common Shares purchased through the Plan. To initiate direct debiting, a
participant must complete the "Automatic Cash Investment" portion of the
Enrollment Form. Debits to participants' accounts will be processed on or
about the fifteenth day of each month. The minimum monthly account debit is
$100 and the maximum is $10,000. Participants will not pay any fee in
connection with optional cash payments made by direct debit. Cash
contributions may not be accepted by the Agent if a participant imposes any
restrictions with respect to the number of Common Shares to be purchased, the
price at which the Common Shares are to be purchased or the timing of the
purchase.
To initiate automatic monthly deductions, the participant must
provide written authorization to the Agent together with a voided blank check
for the account from which funds are to be drawn. The written request for
automatic monthly deduction will be processed and will become effective as
promptly as practicable.
Participants may change or terminate their automatic monthly
deduction election by providing new written instructions to the Agent. To be
effective with respect to a particular month, however, the new instructions
must be received by the Agent prior to the last Trading Day of the preceding
calendar month.
Cashiers Check or Wire (for optional cash payments exceeding $10,000
and initial cash investments exceeding $10,000)
Optional cash payments exceeding $10,000 and initial cash investments
exceeding $10,000 must be made by cashiers check payable to "Registrar and
Transfer Company" or by wire transfer, or by such other method that is
expressly approved by CRIIMI MAE on the Request for Waiver Form with respect
to such optional cash payment or initial cash investment.
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Sale of Common Shares
Participants may elect to sell Common Shares held in their Plan
accounts through the Plan. Participants who wish to sell Common Shares
through the Plan should request the Agent to sell any number of whole Common
Shares held in their Plan accounts by giving written instruction to the
Agent. The Agent will sell Common Shares on the open market through a
registered broker-dealer as soon as practicable, except where and to the
extent necessary under any applicable federal securities laws or other
government or stock exchange regulations. Participants will generally be
unable to terminate the sale after submitting the request. The Company will
have no influence over sales of Common Shares on behalf of participants in
the Plan. Participants will receive the proceeds, less an administrative
charge of $10.00 and applicable brokerage fees and commissions, if any, and
any transfer taxes. Net proceeds of Common Shares sold through the Plan will
be paid to participants normally by check upon settlement of trade. A
participant that wishes to sell Common Shares held in the Plan other than
through the Plan may request that the Agent deliver a certificate for such
Common Shares to the participant, which the participant may then sell through
his or her registered broker-dealer.
If instructions for the sale of Common Shares are received on or
after an ex-dividend date but before the related dividend payment date, the
sale will be processed as described above and a separate check for the
dividend will be mailed following the dividend payment date. A request to
sell all Common Shares held in a participant's account will be treated as a
withdrawal from the Plan (see "--Withdrawal" below).
Share Safekeeping
At the time of enrollment in the Plan, or at any later time,
participants may use the Plan's share safekeeping service to deposit any
Common Share certificates in their possession with the Agent. Participants
will not be charged a fee for this service. Common Shares deposited will be
transferred into the name of the Agent or its nominee and credited to the
participant's account under the Plan.
By using the Plan's share safekeeping service, participants no longer
bear the risk associated with loss, theft or destruction of stock
certificates. Also, because Common Shares deposited with the Agent are
treated in the same manner as Common Shares purchased through the Plan, they
may be transferred or sold through the Plan in a convenient and efficient
manner. See "--Sale of Common Shares" above and "--Withdrawal" and
"--Gift/Transfer of Common Shares Within the Plan" below.
Participants who wish to deposit their Common Share certificates with
the Agent must complete and return to the Agent, by registered, insured mail,
the Common Share certificates to be deposited, along with a properly
completed Enrollment Form, if applicable. The certificates should not be
endorsed.
Gift/Transfer of Common Shares Within the Plan
If a participant wishes to transfer the ownership of all or part of
the Common Shares held in the participant's Plan account to a Plan account
for another person, whether by gift, private sale or otherwise, the
participant may effect such transfer by written request to the Agent,
together with an executed stock assignment (stock power) and a check for
$5.00 payable to "Registrar and Transfer Company," to the Agent. Requests for
transfer are subject to the same requirements as for the transfer of Common
Share certificates, including requirements of a signature guarantee on the
stock assignment.
Common Shares so transferred will continue to be held by the Agent
under the Plan. An account will be opened in the name of the transferee, if
he or she is not already a participant, and such transferee will
automatically be enrolled in the Plan. If the transferee is not already a
registered holder of Common Shares or a Plan participant, the donor may make
a reinvestment election for the transferee at the time of the gift. The
transferee may change the reinvestment election after the gift has been made
as described under "--Reinvestment of Cash Dividends" above.
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The transferee will receive a statement showing the number of Common
Shares transferred to and held in the transferee's Plan account.
Reports to Participants
As soon as practicable after each purchase of Common Shares by the
Agent for the participant's account, a confirmation of the transaction will
be mailed to the participant by the Agent. In addition, a statement of
account will be mailed by the Agent to the participant quarterly. These
confirmation receipts and quarterly statements are the participant's
continuing record of current activity and should be retained for tax
purposes. In addition, each participant will receive all communications sent
to other holders of the Company's Common Shares, including any annual and
quarterly reports to holders of the Company's Common Shares, proxy statements
and dividend income information for tax reporting purposes. Participants
should be aware that it is important to retain all statements received as
there could be a fee incurred when requesting the Agent to supply past
history.
All notices, statements and reports from the Agent to a participant
will be addressed to the participant at his or her latest address of record
with the Agent. Therefore, participants must promptly notify the Agent of any
change of address. To be effective with respect to mailings of dividend
checks and quarterly statements and reports for a particular quarter, address
changes must be received by the Agent prior to the record date for that
quarter's dividend.
Certificates for Common Shares
Common Shares purchased and held under the Plan will be held in
safekeeping by the Agent in its name or the name of its nominee. The number
of Common Shares (including fractional shares) held for each participant will
be shown on each statement of account. Participants may obtain a new
certificate for all or some of the whole Common Shares held in their Plan
accounts upon written request to the Agent. Any remaining whole or fractional
Plan Shares will continue to be held by the Agent. Withdrawal of Common
Shares in the form of a certificate in no way affects dividend reinvestment.
See "--Reinvestment of Cash Dividends" above.
Except as described above under "Gift/Transfer of Common Shares
Within the Plan," Common Shares held by the Agent for a participant's Plan
account may not be pledged or assigned. A participant who wishes to pledge or
assign any such Common Shares must request that a certificate for such Common
Shares be issued in the participant's name.
Plan of Distribution; Expenses
Except to the extent the Agent effects purchases of Common Shares in
open market transactions through a registered broker-dealer or in privately
negotiated transactions negotiated by CRIIMI MAE, the Agent will acquire
Common Shares directly from the Company for the Plan. The Company may sell
Common Shares to owners of Common Shares (including brokers or dealers) who,
in connection with any resales of such Common Shares, may be deemed to be
underwriters. Such Common Shares, including Common Shares acquired pursuant
to Requests for Waiver approved with respect to the optional cash payment and
initial cash investment features of the Plan, may be resold in market
transactions (including coverage of short positions) on any national
securities exchange on which Common Shares trade or in privately negotiated
transactions. The Common Shares are currently listed on the NYSE.
Under certain circumstances, it is expected that a portion of the
Common Shares available for issuance under the Plan will be issued pursuant
to such Requests for Waiver. The difference between the price such owners pay
to the Company for Common Shares acquired under the Plan, after deduction of
the applicable discount from the market price (in the case of optional cash
payments that exceed $10,000), and the price at which such Common Shares are
resold, may be deemed to constitute underwriting commissions received by such
owners in connection with such transactions.
Subject to the availability of Common Shares registered for issuance
under the Plan, there is no total maximum number of Common Shares that can be
issued pursuant to the reinvestment of dividends. From time to time, financial
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intermediaries may engage in positioning transactions in order to benefit
from the discount from the market price of Common Shares acquired through the
reinvestment of dividends under the Plan.
Common Shares purchased for a participant with respect to a
particular Investment Date will be credited to the participant's account at
the weighted average price per share of all Common Shares purchased with
respect to that Investment Date (less any applicable discount). Participants
have no control over the terms and conditions, including price and delivery,
pursuant to which Common Shares are purchased or whether Common Shares are
purchased in the open market through registered broker-dealers, in private
transactions negotiated by the Company or directly from the Company.
The Company will pay the costs of administering the Plan, including
charges by the Agent for bank services on each dividend reinvestment.
Participants will not pay brokerage commissions on Common Shares purchased
directly from the Company. In addition, the Company will pay all brokerage
commissions related to purchases of Common Shares in the open market effected
through registered broker-dealers. The Company will also pay any processing
fees associated with the direct debit feature of the Plan. The Agent may
charge a participant for additional services not provided under the Plan or
where specified charges are indicated. Certain expenses will be incurred by
the participant if the participant requests that Common Shares be sold.
Brokers or nominees who participate on behalf of Beneficial Owners for whom
they are holding Common Shares may charge such beneficial owners fees in
connection with such participation, for which neither the Agent nor the
Company will be responsible.
Withdrawal
A participant may withdraw from the Plan at any time by giving
written instructions to the Agent. Upon a participant's withdrawal from the
Plan, a certificate for the whole Common Shares held in the Plan for the
participant will be issued. Alternatively, a participant may specify in the
withdrawal notice that all (but not less than all) whole Plan Shares be sold.
The Agent will effect the sale through a registered broker-dealer on the open
market as soon as practicable after receipt of the withdrawal notice (see
"--Source and Price of Common Shares" above), and the participant will
receive a check for the proceeds, less an administrative charge of $10.00 and
applicable brokerage fees and commissions, if any, and any transfer taxes.
Whether whole Plan Shares are withdrawn or sold, participants
terminating their participation in the Plan will receive a check for the cash
value of any fractional Common Shares held in their Plan accounts. Fractions
of Common Shares will be valued at the same effective price as whole Common
Shares sold.
If notice of withdrawal is received on or after an ex-dividend date
but before the related dividend payment date, the withdrawal will be
processed as described above and a separate check for the dividend will be
mailed following the dividend payment date.
After participation in the Plan has been terminated, no further
investments may be made without re-enrolling in the Plan.
Miscellaneous
Stock Split, Stock Dividend or Rights Offering
Any dividends in Common Shares or split shares distributed by the
Company on Common Shares held in the Plan will be added to the participant's
account. Common Share dividends or split shares distributed on certificated
Common Shares will be credited to the participant's account, unless otherwise
instructed.
In the event of a rights offering, the participant will receive
rights based upon the total number of whole Common Shares owned, that is, the
total number of Plan Shares and certificated Common Shares standing in the
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participant's name.
Voting of Common Shares Held in the Plan
Whole and fractional Common Shares held in a Plan account may be
voted in person or by the proxy sent to the participant.
Limitation of Liability
Neither the Company nor the Agent (nor any of their respective
agents, representatives, employees, officers, directors or subcontractors)
will be liable in administering the Plan for any act done in good faith nor
for any good faith omission to act, including, without limitation, any claim
of liability arising with respect to the prices or times at which Common
Shares are purchased or sold for participants, or any change in the market
value of Common Shares, or from failure to terminate a participant's account
upon a participant's death. The foregoing does not represent a waiver of any
rights a participant may have under applicable securities laws.
Change or Termination of the Plan
The Company, in its sole discretion, may suspend, modify or terminate
the Plan at any time in whole, in part, or in respect of participants in one
or more jurisdictions. Written notice of such suspension, modification or
termination will be sent to all affected participants at least ten days prior
to such action. No such event will affect any Common Shares then credited to
a participant's account. Upon any whole or partial termination of the Plan by
the Company, certificates for whole Common Shares held in an affected
participant's account under the Plan will be issued to the participant and a
cash payment will be made for any fractional Common Share held in his or her
Plan account. Any change in the Waiver Discount made by the Company shall not
constitute a modification of the Plan requiring notice to participants.
Termination of a Participant
The Company may terminate any participant's participation in the Plan
for any reason (including, without limitation, the attempted circumvention by
a participant of the $10,000 monthly maximum for cash purchases through the
accumulation of Plan accounts over which they have control) after written
notice in advance mailed to such participant at the address appearing on the
Agent's records. A participant whose participation in the Plan has been
terminated will receive certificates for whole Common Shares held in his or
her account and a check for the cash value of any fractional Common Shares
held in his or her Plan account.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain U.S. federal income and estate tax
consequences of the reinvestment of dividends pursuant to the Plan is based
on current law, is for general information only and is not tax advice. This
discussion does not purport to deal with all aspects of taxation that may be
relevant to particular investors in light of their personal investment
circumstances, or certain types of investors (including insurance companies,
tax-exempt organizations, financial institutions and broker-dealers) subject
to special treatment under the federal income tax laws. Those considering
participation in the Plan are urged to consult with their own tax advisors
regarding the specific tax consequences (including the federal, state, local
and foreign tax consequences) that may result from their participation in the
Plan and of potential changes in applicable tax laws. For purposes of this
discussion, a "U.S. Holder" is a participant or Beneficial Owner that is (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, (iii) an estate whose income is includable in gross
income for United States federal income tax purposes regardless of its source
or (iv) a trust if a United States court is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of the
trust. Notwithstanding the
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preceding sentence, to the extent provided in the regulations promulgated by
the Treasury Department, certain trusts in existence on August 20, 1996 and
treated as United States persons prior to such date that elect to continue to
be so treated also shall be considered United States persons. A "Non-U.S.
Holder" is any participant or Beneficial Owner that is not a U.S. Holder. 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.
U.S. Holders
Dividend Reinvestment
The reinvestment of dividends does not relieve the U.S. Holder of any
federal income tax which may be payable on such dividends. Dividends paid
with respect to Common Shares that are reinvested in Common Shares purchased
directly from CRIIMI MAE will be treated for federal income tax purposes as
having been received by the U.S. Holder in the form of a taxable stock
dividend. Accordingly, an amount equal to the fair market value on the date
of purchase of Common Shares acquired with reinvested dividends will be
treated as a dividend to the extent that CRIIMI MAE has current or
accumulated earnings and profits for federal income tax purposes. Dividends
paid with respect to Common Shares that are reinvested in Common Shares
purchased on the open market will be treated for federal income tax purposes
as having been received by the U.S. Holder in the form of a cash dividend.
Accordingly, the actual amount of cash provided by CRIIMI MAE that is used to
purchase the Common Shares on the open market (whether such cash is a payment
of stated dividends or an additional amount paid by CRIIMI MAE to allow the
Common Shares to be provided to the U.S. Holders at 98% of the average
closing sales price), plus (as discussed in more detail below) the amount of
any brokerage commissions paid by CRIIMI MAE with respect to the Common
Shares, will be treated as a dividend for federal income tax purposes to the
extent that CRIIMI MAE has current or accumulated earnings and profits for
federal income tax purposes. U.S. Holders having made optional cash payments
will be deemed to have received a dividend for federal income tax purposes
equal to the excess of the fair market value of the Common Shares purchased
with optional cash payments over the amount of such optional cash payments.
Dividends in excess of current and accumulated earnings and profits,
if any, would not be taxable to a U.S. Holder to the extent that such
dividends do not exceed the adjusted basis of the U.S. Holder's Common
Shares. To the extent such dividends exceed the adjusted basis of a U.S.
Holder's Common Shares, they would be includible in income as capital gain.
In addition, in the event that the Company designates a part or all of the
amount so distributed as a capital gain dividend, such amount would be
treated by the U.S. Holder as long-term capital gain. A Form 1099-DIV mailed
to U.S. Holders at year-end will show total income and the amount of any
capital gain dividend.
The Internal Revenue Service ("IRS") has ruled in private letter
rulings that brokerage commissions paid by a corporation on behalf of
participants in a dividend reinvestment plan (i.e., in the case of open
market purchases of Common Shares) were to be treated as constructive
dividends to the participants. Such constructive dividends were subject to
income tax in the same manner as dividends and were includible in the
participants' cost basis of the Common Shares purchased. Accordingly, if the
Company pays brokerage commissions with respect to any open market purchases
made by the Agent, the Company intends to take the position that participants
will have received their proportionate amount of such commissions as
additional dividends. In addition, consistent with the foregoing, CRIIMI MAE
intends to reflect any discount for purchases of Common Shares under the Plan
as constructive dividends to participants. The information return sent by the
Agent to you and the IRS at the end of the year will show the amount of such
dividends paid to you. While the matter is not free from doubt, CRIIMI MAE
intends to take the position that administrative expenses of the Plan paid by
CRIIMI MAE are not constructive dividends to participants.
The tax basis of Common Shares acquired directly from CRIIMI MAE
pursuant to the reinvestment of dividends under the Plan will be equal to the
fair market value of the Common Shares on the applicable date of purchase.
The tax basis of Common Shares acquired on the open market pursuant to the
reinvestment of dividends under the Plan will be equal to the actual purchase
price of the Common Shares provided to U.S. Holders pursuant to the Plan plus
the U.S. Holder's share of brokerage commissions, if any. The holding period
of Common Shares acquired under the Plan will
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begin on the day following the date as of which the Common Shares were purchased
for the U.S. Holder's account.
A U.S. Holder will not realize any taxable income when the U.S.
Holder receives certificates for Common Shares credited to the U.S. Holder's
account, either upon the U.S. Holder's request for such certificates or upon
withdrawal from or termination of the Plan. However, a U.S. Holder may
recognize gain or loss when Common Shares acquired under the Plan are sold or
exchanged or when a U.S. Holder receives cash for fractional Common Shares.
The amount of such gain or loss will be the difference between the amount
received in such sale or exchange for the U.S. Holder's Common Shares and the
tax basis thereof.
The IRS has ruled in connection with similar plans that a dividend
reinvestment plan will not adversely affect the qualification of a REIT for
federal income tax purposes. In addition, REITs should be able to include
amounts deemed distributed as dividends under such a plan for purposes of its
dividends-paid deduction.
Optional Cash Payments and Initial Cash Purchases
The IRS has indicated in somewhat similar situations that a
participant who makes an optional cash payment for the purchase of Common
Shares under the Plan will be treated as having received a distribution equal
to the excess of the fair market value on the Investment Date of such Common
Shares over the amount of the optional cash payment made by the participant.
In addition, if Common Shares are acquired by the Agent in an open-market
transaction, the IRS may assert that a participant has received an additional
distribution equal to a pro rata share of any commissions or fees paid by the
Company on behalf of the participant.
The taxation of such a distribution is not entirely clear.
Participants should be aware that the Company will treat the entire amount of
any deemed distribution, for tax reporting purposes, as a distribution
taxable as a dividend to the extent of the Company's current or accumulated
earnings and profits. Accordingly, a participant's tax basis in his or her
Common Shares acquired through optional cash payments or an initial cash
investment under the Plan will generally equal the total amount of the
optional cash payments or initial cash investment plus any distributions the
participant is deemed to have received (as described above). A participant's
holding period for Common Shares purchased under the Plan generally will
begin on the day following the date on which Common Shares are credited to
the participant's account.
It is possible, however, that all or a portion of such deemed
distribution should be treated as a tax-free return of capital or not treated
as a taxable distribution. Participants are encouraged to consult their own
tax counsel in this regard.
Non-U.S. Holders
In general, distributions to a Non-U.S. Holder of Common Shares which
are not attributable to gain from the sale or exchange of United States real
property interests and are not designated by the Company 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 Non-U.S.
Holder's conduct of a trade or business in the United States or, if a tax
treaty applies, attributable to a permanent establishment in the United
States ("U.S. trade or business income") generally are subject to U.S.
federal income tax at regular rates (and, in the case of a Non-U.S. Holder
that is a corporation, under certain circumstances may be subject to an
additional "branch profits tax" at a 30% rate or such lower rate as may be
applicable under an income tax treaty), but are not generally subject to the
30% withholding tax if the Non-U.S. Holder files the appropriate form with
the payer. If you are a Non-U.S. Holder whose dividends are subject to United
States income tax withholding, the appropriate amount will be withheld and
the remaining balance will be used to purchase additional Common Shares.
Distributions by CRIIMI MAE which are not dividends out of earnings
and profits (as determined for U.S.
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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 and reduce the tax basis of the Non-U.S. Holder's Common
Shares by the amount of such distribution (but not below zero). Distributions
in excess of the Non-U.S. Holder's tax basis are taxable as a sale or
exchange of Common Shares. If it cannot be determined at the time a
distribution is made whether or not such distribution will be in excess of
current and accumulated earnings and profits, the entire amount of the
distribution will be subject to withholding at the rate applicable to
dividends. However, the Non-U.S. Holder may seek a refund of such amounts
from the IRS if it is subsequently determined that such distribution was, in
fact, in excess of current and accumulated earnings and profits of CRIIMI
MAE. CRIIMI MAE does not expect to pay dividends in excess of current and
accumulated earnings and profits.
Under the Foreign Investment in Real Property Tax Act of 1980
("FIRPTA"), for as long as the Company 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 if the distributions were gains "effectively connected" with a
U.S. trade or business. Therefore, in such circumstances, 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, the Company will be required to withhold U.S. tax equal
to 35% of the amount of dividends that could have been designated as capital
gain dividends, but such requirement apparently is limited to the amount of
such gain that is attributable to the sale or exchange of U.S. real property
interests. The amount so withheld is creditable against the U.S. federal
income tax liability of such Non-U.S. Holder and a refund may be available if
the amount withheld exceeds the U.S. federal income tax liability of the
Non-U.S. Holder.
In order to obtain complete exemption from withholding with respect
to dividends, a Non-U.S. Holder must provide the Company in a timely manner
with either (i) an IRS Form 1001 stating that the Non-U.S. Holder is entitled
to a complete exemption under an applicable treaty, or (ii) if such dividends
are "effectively connected" income, an IRS Form 4224. In order to obtain a
partial exemption from withholding with respect to dividends based on a
treaty, a Non-U.S. Holder must provide CRIIMI MAE in a timely manner with an
IRS Form 1001, stating that the Non-U.S. Holder is so entitled to such a
reduced rate on dividends paid. Such forms must be signed by the Non-U.S.
Holder or the Non-U.S. Holder's agent. A Non-U.S. Holder that is required to
submit a certification on Form 1001 or 4224 to avoid the imposition of United
States federal withholding tax with respect to a dividend on Common Shares is
required to submit such certification to CRIIMI MAE as soon as practicable
after the Non-U.S. Holder acquires such Common Shares or a beneficial
interest therein. If the Company does not physically receive such
certification by the date that is 10 days prior to a dividend payment date,
the Company 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.
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, Common 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.
On October 6, 1997, the Treasury Department issued final rules with
respect to withholding tax on income paid to foreign persons and related
matters (the "Final Withholding Regulations"). The Final Withholding
Regulations will generally be effective for payments made after December 31,
1999, subject to certain transition rules. Non-U.S. Holders are urged to
consult with their own tax advisors with respect to the Final Withholding
Regulations.
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Backup Withholding
If you fail to provide certain federal income tax certifications in
the manner required by law (such as the taxpayer identification number),
dividends on and proceeds from the sale of any Common Shares held for your
account are subject to federal backup withholding, currently at the rate of
31%. Certain exempt holders of the Company's Common Shares (including most
corporations) are, however, exempt from the above withholding requirements,
provided that certain certifications are made.
Any amounts withheld under the backup withholding rules from a
payment to a person would be allowed as a refund or a credit against that
person's United States federal income tax, provided that the required
information is furnished to the IRS. Furthermore, certain penalties may be
imposed by the IRS on a Holder who is required to supply information but who
does not do so in the proper manner.
USE OF PROCEEDS
CRIIMI MAE intends to use the net proceeds from the sale of the Common
Shares offered pursuant to the Plan (i) to acquire or originate mortgage assets,
primarily Subordinated CMBS, (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 and/or used to pay down debt on a temporary basis.
LEGAL MATTERS
Certain legal matters will be passed upon for CRIIMI MAE by Swidler &
Berlin, Chartered, Washington, D.C.
EXPERTS
The financial statements included in CRIIMI MAE's Annual Report on Form
10-K for the year ended December 31, 1997, incorporated herein by reference,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their 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 in giving said reports.
24
<PAGE>
Schedule A
List of Important Dates for the Plan
The following list sets forth, for each quarter through the quarter
ended December 31, 1999, the Dividend Reinvestment Date.
Dividend Reinvestment Date
10/01/98
01/04/99
04/01/99
07/01/99
10/01/99
01/03/00
The following list sets forth, for each month through the month ended
December 31, 1999, (i) the latest date on which the Threshold Price and Waiver
Discount may be set by the Company, (ii) the date by which initial cash
investments and optional cash payments must be received by the Agent for
investment on the Investment Date, (iii) the date that the Pricing Period
commences and (iv) the Investment Date (i.e., the date on which initial cash
investments and optional cash payments will be invested in Common Shares).
<TABLE>
<CAPTION>
Threshold Initial Cash Investment Pricing
Price and Waiver and Optional Cash Period Investment
Discount Set Payment due Date Commences Date
------------------ ---------------------- --------- --------
<S> <C> <C> <C>
07/29/98 07/31/98 08/03/98 08/17/98
08/27/98 08/31/98 09/01/98 09/16/98
09/28/98 09/30/98 10/01/98 10/15/98
10/28/98 10/30/98 11/02/98 11/16/98
11/25/98* 11/30/98 12/01/98 12/15/98
12/29/98 12/31/98 01/04/99 01/19/99
01/27/99 01/29/99 02/01/99 02/16/99
02/24/99 02/26/99 03/01/99 03/15/99
03/29/99 03/31/99 04/01/99 04/16/99
04/28/99 04/30/99 05/03/99 05/17/99
05/26/99 05/28/99 06/01/99 06/15/99
06/28/99 06/30/99 07/01/99 07/16/99
07/28/99 07/30/99 08/02/99 08/16/99
08/27/99 08/31/99 09/01/99 09/16/99
09/28/99 09/30/99 10/01/99 10/15/99
10/27/99 10/29/99 11/01/99 11/15/99
11/24/99* 11/30/99 12/01/99 12/15/99
</TABLE>
- ---------------
* Because the Company's offices will be closed on the day following the
Thanksgiving day holiday, the Company will establish the Threshold Price and
Waiver Discount one Trading Day earlier than it otherwise would.
<PAGE>
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 and,
if given or made, such information or representation must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any security other than the securities offered
hereby, nor does it 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 nor any sale made hereunder shall, under any circumstances,
create any implication that the information contained herein is correct as of
any date subsequent to the date hereof.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information.....................................................................................................2
Incorporation of Certain Documents by Reference...........................................................................2
Summary of the Plan.......................................................................................................3
CRIIMI MAE................................................................................................................6
CRIIMI MAE Inc. Dividend Reinvestment and
Stock Purchase Plan...............................................................................................6
Certain United States Federal Income Tax Considerations..................................................................20
Use of Proceeds..........................................................................................................24
Legal Matters............................................................................................................24
Experts..................................................................................................................24
List of Important Dates..........................................................................................Schedule A
</TABLE>
Dividend Reinvestment
and Stock Purchase Plan
CRIIMI MAE Inc.
4,700,000 Common Shares
--------------------
PROSPECTUS
--------------------
, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Dividend
All of the expenses set forth below, except the SEC registration fee,
are estimated.
<TABLE>
<S> <C>
SEC registration fee $17,300
New York Stock Exchange listing fee
Printing and engraving expenses 7,000
Accounting fees and expenses
Legal fees and expenses 25,000
Blue Sky fees and expenses (including legal fees)
Agent fees
Miscellaneous
-----------
Total $
-----------
-----------
</TABLE>
----------
All of the above are estimated, except the SEC registration fee.
Item 15. Indemnification of Directors and Officers
Under Maryland law, a corporation formed under Maryland law is
permitted to limit, by provisions in its articles of incorporation, the
liability of its directors and officers to the corporation or its stockholders
for money damages except for (i) actual receipt of an improper benefit or profit
in money, property or services or (ii) active and deliberate dishonesty
established by a final judgment as being material to the cause of action. CRIIMI
MAE's Articles of Incorporation include such a provision which limits such
liability to the fullest extent permitted by Maryland law.
CRIIMI MAE's Bylaws provide that CRIIMI MAE shall indemnify its
directors and officers, and may indemnify other persons who may be indemnified,
to the fullest extent permitted by Maryland law against any liability and
related expenses (including attorneys' fees) incurred in conjunction with any
proceeding or threatened proceeding in which any of them may be involved, or
threatened to be involved, as a party or otherwise, arising out of or incidental
to CRIIMI MAE's business. CRIIMI MAE has purchased and maintains liability
insurance against liabilities that may be asserted against such persons in
connection with CRIIMI MAE, whether or not indemnification against such
liabilities would be permitted under the provisions of CRIIMI MAE's Articles of
Incorporation.
Section 2-418 of the General Corporation Law of the State of Maryland
provides, together with the Bylaws described above, for the indemnification of
directors, officers and other corporate agents in terms sufficiently broad to
indemnify such persons, under certain circumstances, for liabilities (including
reimbursements of expenses incurred) arising under the Securities Act.
II-1
<PAGE>
Item 16. Exhibits
(a) Exhibits.
Exhibit
Number Description
-------- -----------
*4.1 --Articles of Incorporation, as amended, of CRIIMI MAE Inc.
*4.2 --Bylaws, as amended, of CRIIMI MAE Inc.
*4.6 --Form of specimen certificate representing Common Shares
5 --Opinion regarding validity of securities being registered
8 --Tax Opinion
23.1 --Consent of Arthur Andersen LLP
23.2 --Consent of Swidler & Berlin, Chartered (included in Exhibit 5)
24.1 --Power of Attorney (included on signature page of Registration
Statement)
**99.1 --Form of Enrollment Form
---------------
* Incorporated herein by reference to CRIIMI MAE's Registration
Statement on Form S-3 (File No. 33- 50679).
** Incorporated herein by reference to CRIIMI MAE's Registration
Statement on Form S-3 (File No. 333- 41373).
II-2
<PAGE>
Item 17. Undertakings
The undersigned registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective
amendment to this registration statement to include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; (2) for the purpose of determining any liability
under the Securities Act, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; and (3) to
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant also hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described in
Item 15, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. If a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rockville, State of Maryland, on the 8th day of July,
1998.
CRIIMI MAE INC.
By: /s/ WILLIAM B. DOCKSER
----------------------------
William B. Dockser
Chairman of the Board
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints William B. Dockser and H. William
Willoughby, and each of them severally, as his true and lawful,
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or of his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C> <C>
/s/ WILLIAM B. DOCKSER Chairman of the Board (Principal July 8, 1998
--- ------------------
William B. Dockser Executive Officer and Director)
/s/ H. WILLIAM WILLOUGHBY Director, President and Secretary July 8, 1998
--- ---------------------
H. William Willoughby
/s/ GARRET G. CARLSON Director July 8, 1998
--- -----------------
Garrett G. Carlson
/s/ G. RICHARD DUNNELLS Director July 8, 1998
--- -------------------
G. Richard Dunnells
/s/ ROBERT J. MERRICK Director July 8, 1998
--- -----------------
Robert J. Merrick
/s/ CYNTHIA O. AZZARA Chief Financial Officer July 8, 1998
--- -----------------
Cynthia O. Azzara (Principal Financial and
Accounting Officer)
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
*4.1 --Articles of Incorporation, as amended, of CRIIMI MAE Inc.
*4.2 --Bylaws, as amended, of CRIIMI MAE Inc.
*4.6 --Form of specimen certificate representing Common Shares
5 --Opinion regarding validity of securities being registered 8
--Tax Opinion
23.1 --Consent of Arthur Andersen LLP
23.2 --Consent of Swidler & Berlin, Chartered (included in Exhibit 5)
24.1 --Power of Attorney (included on signature page of Registration
Statement)
**99.1 --Form of Enrollment Form
---------------
* Incorporated herein by reference to CRIIMI MAE's Registration
Statement on Form S-3 (File No. 33- 50679), as amended.
** Incorporated herein by reference to CRIIMI MAE's Registration
Statement on Form S-3 (File No. 333- 41373).
<PAGE>
Exhibit 5
[Swidler & Berlin, Chartered]
July 8, 1998
The Board of Directors
CRIIMI MAE Inc.
11200 Rockville Pike
Rockville, Maryland
Re: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to CRIIMI MAE Inc., a Maryland corporation
(the "Company"), with respect to the Company's Registration Statement on Form
S-3, Commission File No. 333- (the "Registration Statement"), filed with the
Securities and Exchange Commission, in connection with the registration under
the Securities Act of 1933, as amended (the "Securities Act"), of up to
4,700,000 shares of the Company's common stock, par value $.01 per share
("Common Shares"), which Common Shares may be sold by the Company from time
to time pursuant to the CRIIMI MAE Inc. Dividend Reinvestment and Stock
Purchase Plan, as set forth in the prospectus which forms a part of the
Registration Statement. This opinion letter is furnished to you at your
request to enable you to fulfill the requirements of Item 601(b)(5) of
Regulation S-K, 17 C.F.R. ss. 229.601(b)(5), in connection with the
Registration Statement.
As counsel to the Company, we have examined the Company's Articles
of Incorporation, as amended (the "Articles"), and such Company records,
certificates and other documents and relevant statutes, regulations,
published rulings and such questions of law as we considered necessary or
appropriate for the purpose of this opinion.
In our examination, we have assumed the authenticity of original
documents, the accuracy of copies and the genuineness of signatures. We have
relied upon the representations and statements of officers and other
representatives of the Company with respect to the factual determinations
underlying the legal conclusions set forth herein. We have not attempted to
verify independently such representations and statements.
We assume that the issuance, sale, amount and terms of the Common
Shares to be offered from time to time will be duly authorized and determined
by proper action of the Board of Directors of the Company consistent with the
procedures and terms described in the Registration Statement (each, a "Board
Action") and in accordance with the Articles and applicable Maryland law.
This opinion letter is based as to matters of law solely on (i) the
General Corporation Law
<PAGE>
of the State of Maryland and (ii) Maryland contract law (but excluding any
statutes, ordinances, administrative decisions, rules or regulations of any
political subdivision of Maryland), in each case as currently in effect, and
we express no opinion herein as to any other laws, statutes, ordinances,
rules or regulations.
Based upon, subject to and limited by the foregoing and the other
qualifications herein, we are of the opinion that, when the Registration
Statement has become effective under the Securities Act, upon due
authorization by Board Action, and upon issuance and delivery of such Common
Shares against payment of valid consideration therefor in accordance with the
terms of such Board Action, and as contemplated by the Registration
Statement, such Common Shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our firm in the Registration
Statement. In giving this consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the
Securities Act or the rules promulgated thereunder.
This opinion is rendered solely for your benefit in connection with
the transactions described above upon the understanding that we are not
hereby assuming any professional responsibility to any other person. Except
as provided in the preceding paragraph, this opinion may not be relied upon
by any other person and this opinion may not be used, disclosed, quoted,
filed with a governmental agency or otherwise referred to without our express
prior written consent. The opinions expressed in this letter are limited to
the matters expressly set forth herein, and no other opinions should be
inferred beyond the matters expressly stated herein.
Very truly yours,
/s/ Swidler & Berlin, Chartered
<PAGE>
Exhibit 8
[SWIDLER & BERLIN, CHARTERED]
July 8, 1998
CRIIMI MAE Inc.
The CRI Building
11200 Rockville Pike
Rockville, MD 20852
RE: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to CRIIMI MAE Inc., a Maryland corporation
(the "Company"), with respect to the Company's Registration Statement on Form
S-3, Commission File No. 333- (the "Registration Statement"), filed with the
Securities and Exchange Commission, in connection with the registration under
the Securities Act of 1933, as amended (the "Securities Act"), of up to
4,700,000 shares of the Company's common stock, par value $.01 per share
("Common Shares"), which Common Shares may be sold by the Company from time
to time pursuant to the CRIIMI MAE Inc. Dividend Reinvestment and Stock
Purchase Plan, as set forth in the prospectus which forms a part of the
Registration Statement (the "Prospectus"). This opinion letter is furnished
to you at your request to enable you to fulfill the requirements of Item
601(b)(8) of Regulation S-K, 17 C.F.R. ss.ss. 229.601(b)(8), in connection
with the Registration Statement.
In issuing this opinion, we have examined (1) the Registration
Statement, including the Prospectus, (2) the Company's Articles of
Incorporation, as amended, and (3) such other corporate records, including
the resolutions of the Company's Board of Directors, and such other documents
as we have deemed necessary in order to express the opinions set forth below.
In our examination we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
to all originals of all documents submitted to us as copies. The opinions set
forth in this letter are premised on certain written representations of the
Company contained in a letter to us of even date herewith.
In rendering our opinion, we have considered the applicable
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations promulgated thereunder ("Treasury Regulations"),
relevant judicial authorities, rulings of the United States Internal Revenue
Service (the "Service"), and such other authorities as we deemed relevant.
The Code, Treasury Regulations, judicial decisions, rulings and other
authorities that we have considered are subject to change at any time and
with retroactive effect. A change in any of the authorities upon which our
<PAGE>
CRIIMI MAE Inc.
July 8, 1998
Page 2
opinion is based could affect our conclusions. Moreover, relevant laws could
change in a manner that could adversely affect the Company or its
stockholders. We undertake no obligation to inform you of any such change in
the law. We have not been requested to opine, and we have not opined, as to
any issues other than those expressly set forth herein. Capitalized terms
used in this opinion letter and not otherwise defined are as defined in the
Prospectus.
The Company is intended to qualify as a real estate investment trust
("REIT") under the Code. Based upon and subject to the foregoing, it is our
opinion that:
(1) the Company was organized and has operated in conformity with the
requirements for qualification and taxation as a REIT under the
Code for each of the taxable years it has been in existence, and
the Company's current organization and method of operation will
enable it to continue to meet the requirements for qualification
as a REIT for each of its subsequent taxable years; and
(2) the discussions in the Registration Statement and Prospectus
under the heading "CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS" are correct in all material respects and fairly
summarize the United States federal income tax considerations
that are likely to be material to a holder of Common Shares of
the Company.
The Company's qualification as a REIT under the Code will depend
upon the Company's ability to meet, through actual operating results,
distribution levels, diversity of stock ownership and the various income and
asset qualification tests imposed under the Code. Such operating results may
not be reviewed by us as counsel, and accordingly, no assurance can be given
that the actual results of the Company's operations for any one taxable year
will satisfy the requirements under the Code for REIT qualification.
Moreover, certain aspects of the Company's operations have not been
considered by the courts or the Service. There can be no assurance that a
court or the Service will agree with our opinion. In addition, qualification
as a REIT depends on future transactions and events that cannot be known at
this time.
For a discussion relating the law to the facts, and the legal
analysis underlying the opinions set forth in this letter, we incorporate by
reference the discussion of federal income tax issues in the sections of the
Registration Statement and the Prospectus under the heading "CERTAIN UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS."
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our firm in the Registration
Statement. In giving this consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the
Securities Act or the rules promulgated thereunder.
<PAGE>
CRIIMI MAE Inc.
July 8, 1998
Page 3
This opinion is rendered solely for your benefit in connection with
the transactions described above upon the understanding that we are not
hereby assuming any professional responsibility to any other person. Except
as provided in the preceding paragraph, this opinion may not be relied upon
by any other person and this opinion may not be used, disclosed, quoted,
filed with a governmental agency or otherwise referred to without our express
prior written consent. The opinions expressed in this letter are limited to
the matters expressly set forth herein, and no other opinions should be
inferred beyond the matters expressly stated herein.
Very truly yours,
/s/ Swidler & Berlin, Chartered
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 21, 1998, included in the Annual Report of CRIIMI MAE Inc.'s Form
10-K for the year ended December 31, 1997, and to all references to our Firm
included in or made a part of this registration statement.
/s/ Arthur Andersen LLP
Washington, D.C.
July 8, 1998
