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PROSPECTUS
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 July 15, 1998
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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.
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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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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
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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."
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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.
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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.
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As a result, participants will generally be unable to depend on the
availability of a market discount regarding 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
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to circumvent the Plan's standard $10,000 per month maximum by accumulating
accounts over which they have control 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
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all subsequent dividends on Plan Shares. Dividends will continue to be
reinvested until the participant specifies 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
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investment within the minimum and maximum investment limitations established for
the Plan (see "--Optional Cash 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
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<PAGE>
typically extend over two to five Trading Days. Newly issued Common Shares
acquired with optional cash payments 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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<PAGE>
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.
17
<PAGE>
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
18
<PAGE>
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.
19
<PAGE>
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
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
20
<PAGE>
(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 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
21
<PAGE>
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 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.
22
<PAGE>
Distributions by CRIIMI MAE which are not dividends out of earnings and
profits (as determined for U.S. federal income tax purposes) should not be
subject to U.S. withholding tax. Such distributions are treated first as a
tax-free return of capital to the Non-U.S. Holder 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.
23
<PAGE>
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.
<TABLE>
<CAPTION>
Dividend Reinvestment Date
--------------------------
<S> <C>
10/01/98
01/04/99
04/01/99
07/01/99
10/01/99
01/03/00
</TABLE>
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>
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No dealer, salesperson or other person is authorized in connection with any
offering made hereby to give any information or to make any representation other
than those contained or incorporated by reference in this Prospectus 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
---------------------
July 15, 1998
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