SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):January 22, 1998
CRIIMI MAE Inc.
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(Exact name of registrant as specified in its charter)
Maryland 1-10360 52-1622022
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
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(Address of principal executive office) (Zip code)
Registrant's telephone number including area code: (301) 816-2300
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(Former name or former address, if changed since last report)
Exhibit Index on Page 4<PAGE>
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Item 5. Other Events.
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CRIIMI MAE Inc. (the "Company") is issuing and selling pursuant to its
registration statement on Form S-3 filed with the Securities and Exchange
Commission on October 21, 1997 (Commission File Number 333-38409) (the
"Registration Statement"), as supplemented by a Prospectus Supplement thereto
dated January 22, 1998 (the "Prospectus Supplement"), 2,100,000 shares of
common stock of the Company, par value $.01 per share ("Common Stock").
Closing on the sale is scheduled to occur on January 28, 1998.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
c) Exhibits
1.0 Underwriting Agreement dated January 22, 1998 between
CRIIMI MAE Inc. and Prudential Securities Incorporated
8.1 Opinion of Counsel re Tax Matters
20 Rule 424(b)(5) Prospectus Supplement dated January 22, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CRIIMI MAE Inc.
Date: January 22, 1998 By: /s/ H. William Willoughby
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H. William Willoughby
President
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INDEX TO EXHIBITS
FORM 8-K
Exhibit Page
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1.0 Underwriting Agreement dated as of January 22, 1998
between CRIIMI MAE Inc. and Prudential Securities Incorporated
8.1 Opinion of Counsel re Tax Matters
*20 Rule 424(b)(5) Prospectus Supplement dated January 22, 1998
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*Filed by Registrant with the Commission on January 23, 1998 and incorporated
herein by reference.
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CRIIMI MAE INC.
(a Maryland corporation)
2,100,000 Shares
Common Stock
UNDERWRITING AGREEMENT
January 22, 1998
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
New York, New York 10292
Ladies and Gentlemen:
CRIIMI MAE INC., a Maryland corporation, which is organized and has
been operated in conformity with the requirements for qualification and
taxation as a real estate investment trust (the "Company"), hereby confirms
its agreement with Prudential Securities Incorporated (the "Underwriter"), as
set forth below.
1. Securities. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the Underwriter 2,100,000 shares
(the "Firm Securities") of the Company's Common Stock, par value $.01 per
share ("Common Shares"). The Company also proposes to issue and sell to the
Underwriter not more than 315,000 additional Common Shares if requested by the
Underwriter as provided in Section 3 of this Agreement. Any and all Common
Shares to be purchased by the Underwriter pursuant to such option are referred
to herein as the "Option Securities", and the Firm Securities and any Option
Securities are collectively referred to herein as the "Securities".
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"). A registration statement on
such Form (File No. 333-38409) with respect to the Securities, including a
basic prospectus, has been filed by the Company with the Securities and
Exchange Commission (the "Commission") under the Act, and one or more
amendments to such registration statement may have been so filed. Such
registration statement, as so amended, has been declared by the Commission to
be effective under the Act. Such registration statement, as amended at the
date of this Agreement, meets the requirements set forth in Rule 415(a)(1)(x)
under the Act and complies in all other material respects with said Rule. The
Company will next file with the Commission, either (A) if the Company relies
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on Rule 434 under the Act, a Term Sheet (as hereinafter defined) relating to
the Securities, that shall identify the Preliminary Prospectus (as hereinafter
defined) that it supplements and, if required to be filed pursuant to Rules
434(c)(2) and 424(b), an Integrated Prospectus (as hereinafter defined), in
either case, containing such information as is required or permitted by Rule
434, 430A and 424(b) under the Act or (B) if the Company does not rely on Rule
434 under the Act, pursuant to Rule 424(b) under the Act a final prospectus
supplement to the basic prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment shall have
been filed, in such registration statement), with such changes or insertions
as are required by Rule 430A under the Act or permitted by Rule 424(b) under
the Act, and in the case of clause (i)(A) or (i)(B) of this sentence as have
been provided to and approved by the Underwriter prior to the execution of
this Agreement. The Company may also file a related registration statement
with the Commission pursuant to Rule 462(b) under the Act for the purpose of
registering certain additional Securities, which registration shall be
effective upon filing with the Commission. As used in this Agreement, the
term "Original Registration Statement" means the registration statement
initially filed relating to the Securities, as amended at the time when it was
declared effective, including (A) all financial schedules and exhibits
thereto, (B) all documents incorporated by reference therein filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (C) any
information omitted therefrom pursuant to Rule 430A under the Act and included
in the Prospectus (as hereinafter defined) or, if required to be filed
pursuant to Rule 434(c)(2) and 424(b), in the Integrated Prospectus; the term
"Rule 462(b) Registration Statement" means any registration statement filed
with the Commission pursuant to Rule 462(b) under the Act (including the
Registration Statement and any Preliminary Prospectus or Prospectus
incorporated therein at the time such Registration Statement becomes
effective); the term "Registration Statement" includes both the Original
Registration Statement and any Rule 462(b) Registration Statement; the term
"Preliminary Prospectus" means each prospectus subject to completion filed
with such registration statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration
Statement or any amendment thereto at the time it was declared effective) or
any preliminary prospectus supplement filed pursuant to Rule 424(b) after the
Registration Statement was declared effective, including all documents
incorporated by reference therein filed under the Exchange Act; the term
"Prospectus" means:
(A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule 424(b)(7)
under the Act, together with the preliminary Prospectus identified
therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the
prospectus, as supplemented, first filed with the Commission after the
date hereof pursuant to Rule 424(b) under the Act; or
(C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the Act,
the prospectus included in the Registration Statement, including, in the
case of clauses (A), (B) or (C) of this sentence, all documents
incorporated by reference therein filed under the Exchange Act; the term
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"Integrated Prospectus" means a prospectus first filed with the
Commission pursuant to Rules 434(c)(2) and 424(b) under the Act; and the
Term "Term Sheet" means any abbreviated term sheet that satisfies the
requirements of Rule 434 under the Act. Any reference in this Agreement
to an "amendment or supplement" to any Preliminary Prospectus, the
Prospectus or any Integrated Prospectus or an "amendment" to any
registration statement (including the Registration Statement) shall be
deemed to include any document incorporated by reference therein that is
filed with the Commission under the Exchange Act after the date of such
Preliminary Prospectus, Prospectus, Integrated Prospectus or
registration statement, as the case may be. For purposes of the
preceding sentence, any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet; any
reference to the "effective date" of an amendment to a registration
statement shall, if such amendment is effected by means of the filing
with the Commission under the Exchange Act of a document incorporated by
reference in such registration statement, be deemed to refer to the date
on which such document was so filed with the Commission.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus. When any Preliminary Prospectus and any
amendment or supplement thereto was filed with the Commission, it (i)
contained all statements required to be stated therein in accordance with, and
complied in all material respects with the requirements of, the Act, the
Exchange Act and the respective rules and regulations of the Commission
thereunder, and (ii) did not include any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto was
declared effective, it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with the
requirements of, the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and (ii) did not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading. When the Prospectus or any Term
Sheet that is a part thereof or any amendment or supplement to the Prospectus
is filed with the Commission pursuant to Rule 424(b) (or, if the Prospectus or
part thereof or such amendment or supplement is not required to be so filed,
when the Registration Statement or the amendment thereto containing such
amendment or supplement to the Prospectus was declared effective), on the date
when the Prospectus is otherwise amended or supplemented and on the Firm
Closing Date and any Option Closing Date (both as hereinafter defined), each
of the Prospectus, and, if required to be filed pursuant to Rules 434(c)(2)
and 424(b) under the Act, the Integrated Prospectus as amended or supplemented
at any such time, (i) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act, the Exchange Act and the
respective rules and regulations of the Commission thereunder and (ii) did not
or will not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (b) do not apply to statements or <PAGE>
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omissions made in any Preliminary Prospectus or any amendment or supplement
thereto, the Registration Statement or any amendment thereto, the Prospectus
or, if required to be filed pursuant to Rules 434(c)(2) and 424(b) and the
Act, the Integrated Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use therein.
(c) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective (i) the Company
has filed a Rule 462(b) Registration Statement in compliance with and that is
effective upon filing pursuant to Rule 462(b) and has received confirmation of
its receipt and (ii) the Company has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing of the
Rule 462(b) Registration Statement, in compliance with Rule 111 promulgated
under the Act, or the Commission has received payment of such filing fee.
(d) Each subsidiary of the Company is set forth in Schedule 1 hereto (the
"Subsidiaries"). The Company and each of its Subsidiaries have been duly
organized and are validly existing as corporations or limited partnerships in
good standing under the laws of their respective jurisdictions of
incorporation or formation and are duly qualified to transact business as
foreign corporations or entities and are in good standing under the laws of
all other jurisdictions where the ownership or leasing of their respective
properties or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified does not amount to
a material liability or disability to the Company and its Subsidiaries, taken
as a whole.
(e) The Company and each of its Subsidiaries have full power (corporate
and other) to own or lease their respective properties and conduct their
respective businesses as described in the Registration Statement, and the
Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus; and the Company has full power (corporate and other)
to enter into this Agreement and to carry out all the terms and provisions
hereof to be carried out by it.
(f) The issued shares of capital stock of each of the Company's
Subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and, except for directors' qualifying shares and as otherwise
set forth in the Prospectus, or if the Prospectus is not in existence, the
most recent Preliminary Prospectus, are owned beneficially by the Company free
and clear of any security interests, liens, encumbrances, equities or claims.
(g) The Company has an authorized, issued and outstanding capitalization
as set forth in the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus. All of the issued shares of capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable. The Firm Securities and the Option Securities have been
duly authorized and at the Firm Closing Date or the related Option Closing
Date (as the case may be), after payment therefor in accordance herewith, will
be validly issued, fully paid and nonassessable. No holders of outstanding
shares of capital stock of the Company are entitled as such to any preemptive
or other rights to subscribe for any of the Securities, and no holder of <PAGE>
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securities of the Company has any right which has not been fully exercised or
waived to require the Company to register the offer or sale of any securities
owned by such holder under the Act in the public offering contemplated by this
Agreement.
(h) The capital stock of the Company conforms to the description thereof
contained in the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus.
(i) Except as disclosed in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus, there are not outstanding
(A) securities or obligations of the Company or any of its Subsidiaries
convertible into or exchangeable for any capital stock of the Company or any
of the Subsidiaries, (B) warrants, rights or options to subscribe for or
purchase from the Company or any of the Subsidiaries any such capital stock or
any such convertible or exchangeable securities or obligations, or (C)
obligations of the Company or any of the Subsidiaries to issue any shares of
capital stock, any such convertible or exchangeable securities or obligations,
or any such warrants, rights or options.
(j) The consolidated financial statements and schedules of the Company
and its consolidated Subsidiaries included in the Registration Statement
and the Prospectus fairly present the financial position of the Company
and its consolidated Subsidiaries and the results of operations and
changes in financial condition as of the dates and periods therein
specified. Such financial statements and schedules have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved (except as otherwise noted
therein). The selected financial data set forth under the caption
"Selected Consolidated Financial Data" in the Prospectus Supplement and in
the Company's Annual Report on Form 10-K for the fiscal year ended 1996,
fairly present, on the basis stated in each of the Prospectus and such
Annual Report, the information included therein. In addition, any pro
forma financial statements of the Company and its Subsidiaries and the
related notes thereto included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been
prepared in all material respects in accordance with the Commission's
rules and guidelines with respect to pro forma financial statements and
have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(k) Arthur Anderson LLP, who have certified certain financial
statements of the Company and its consolidated Subsidiaries and delivered
their report with respect to the audited consolidated financial statements
and schedules included in the Registration Statement and the Prospectus
or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus, are independent public accountants as required by the Act, the
Exchange Act and the related published rules and regulations thereunder.
(l) The execution and delivery of this Agreement have been duly
authorized by the Company and this Agreement has been duly executed and <PAGE>
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delivered by the Company, and is the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(m) No legal or governmental proceedings are pending to which the
Company or any of its Subsidiaries is a party or to which the property of the
Company or any of its Subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and that are not so
described or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus, and no such proceedings have been threatened against
the Company or any of its Subsidiaries or with respect to any of their
respective properties; and no contract or other document is required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that is not described therein, or if the
Prospectus is not in existence, the most recent Preliminary Prospectus, or
filed as required.
(n) The issuance, offering and sale of the Securities to the Underwriter
by the Company pursuant to this Agreement, the compliance by the Company with
the other provisions of this Agreement and the consummation of the other
transactions herein contemplated do not (i) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as have been obtained, such as may be required under
state securities or blue sky laws and, if the registration statement filed
with respect to the Securities (as amended) is not effective under the Act as
of the time of execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Act, or (ii) conflict with
or result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any (a) indenture, mortgage, deed of trust, lease
or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of their respective properties are bound, or (b) the charter documents or
by-laws of the Company or any of its Subsidiaries, or (c) any statute or any
judgment, decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or any of its
Subsidiaries, except in the case of clauses (a) and (c), for such breaches,
conflicts, violations or defaults that would not have a Material Adverse
Effect (as defined below).
(o) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus, neither the Company nor
any of its Subsidiaries has sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding and there has not been
any material adverse change, or any development involving a prospective
material adverse change, in the condition (financial or otherwise),
management, business prospects, net worth, or results of operations of the
Company or any of its Subsidiaries taken as a whole (a "Material Adverse
Effect"), except in each case as described in or contemplated by the
Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus.
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(p) The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold,
bid for, purchased, or paid anyone any compensation for soliciting purchases
of, the Securities or (B) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company, other
than for the March 24, 1997 Equity offering and the November 21 1997 Note
issuance.
(q) The Company has not distributed and, prior to the later of (i) the
Closing Date and (ii) the completion of the distribution of the Securities,
will not distribute any offering material in connection with the offering and
sale of the Securities other than the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or other materials, if any permitted by the Act.
(r) The Company is organized and has been operated in conformity with
the requirements for qualification and taxation as a real estate investment
trust ("REIT") under the Internal Revenue Code of 1986, as amended (the
"Code"), for each of its taxable years beginning with its taxable year ended
December 31, 1989, and its current organization and method of operation will
enable it to continue to meet the requirements for qualification as a REIT.
(s) No labor dispute with the employees of the Company or any of the
Subsidiaries exists or, to the knowledge of the Company, is imminent, and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or any of the Subsidiaries principal customers or
contractors, which, in either case, may reasonably be expected to result in a
Material Adverse Effect.
(t) The Company and its Subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent applications, trademarks,
service marks, trade names, licenses, copyrights and proprietary or other
confidential information currently employed by them in connection with their
respective businesses, and neither the Company nor any of the Subsidiaries has
received any notice of infringement of or conflict with asserted rights of any
third party with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect except as described in or contemplated by
the Prospectus.
(u) The Company and each of its Subsidiaries have good and marketable
title in fee simple to all items of real property and marketable title to all
personal property owned by each of them, in each case free and clear of any
security interests, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such
property and do not interfere with the use made or proposed to be made of such
property by the Company or any of the Subsidiaries, and any real property and
buildings held under lease by the Company or any of the Subsidiaries are held
under valid, subsisting and enforceable leases, with such exceptions as are
not material and do not interfere with the use made or proposed to be made of
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such property and buildings by the Company or any Subsidiaries, in each case
except as described in or contemplated by the Prospectus.
(v) The Company and its Subsidiaries conduct and will conduct their
operations in a manner that does not and will not subject any of them to
registration as an investment company under the Investment Company Act of
1940, as amended, and this transaction will not cause the Company or any of
its Subsidiaries to become an investment company subject to registration under
such Act.
(w) Neither the Company nor any of its Subsidiaries is in violation of
any federal or state law or regulation relating to occupational safety and
health or to the storage, handling or transportation of hazardous or toxic
materials and the Company and its Subsidiaries have received all permits,
licenses or other approvals required of them under applicable federal and
state occupational safety and health and environmental laws and regulations to
conduct their respective businesses, and the Company and each of the
Subsidiaries is in compliance with all terms and conditions of any such
permit, license or approval, except any such violation of law or regulation,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
which would not, singly or in the aggregate, result in a Material Adverse
Effect, except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(x) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a Material
Adverse Effect) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as described in or
contemplated by the Prospectus.
(y) The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any of the Subsidiaries has been refused any
insurance coverage sought or applied for; and neither the Company nor any of
the Subsidiaries has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect, except as
described in or contemplated by the Prospectus.
(z) The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
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with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(aa) The Company has not distributed and, prior to the later of (i) the
Firm Closing Date (as defined hereinafter) and (ii) the completion of the
distribution of the Securities, will not distribute any offering material in
connection with the offering and sale of the Securities other than the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or other materials, if
any permitted by the Act.
(ab) The Company has not at any time during the last five years (i) made
any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment
to any federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
(ac) All material transactions between the Company and the officers and
directors of the Company and its affiliates required to be disclosed in the
Registration Statement and Prospectus have been accurately disclosed in all
material respects in the Registration Statement and Prospectus and the
documents incorporated therein by reference.
(ad) None of the assets of the Company are, nor will such assets, as of
the Closing Date, constitute, "plan assets" under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
(ae) Any certificate signed by any officer of the Company or any of the
Subsidiaries and delivered to the Underwriter or to counsel for the
Underwriter in connection with the offering of the Securities shall be deemed
a representation and warranty by the Company to the Underwriter as to the
matters covered thereby on the date of such certificate and, unless
subsequently amended or supplemented, at each Representation Date subsequent
thereto.
3. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to the Underwriter, and the
Underwriter agrees to purchase from the Company, at a purchase price of
$14.335 per share, the Firm Securities. One or more certificates in
definitive form for the Firm Securities that the Underwriter has agreed to
purchase hereunder, and in such denomination or denominations and registered
in such name or names as the Underwriter requests upon notice to the Company
at least 48 hours prior to the Firm Closing Date, shall be delivered by or on
behalf of the Company to the Underwriter for its account, against payment by
or on behalf of the Underwriter of the purchase price thereof by wire transfer
in same day funds (the "Wired Funds") to the account of the Company. Such
delivery of and payment for the Firm Securities shall be made at the offices
of Hogan & Hartson L.L.P., 555 Thirteenth Street N.W., Washington D.C. 20004
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at 9:30 A.M., New York time, on January 28, 1998, or at such other place, time
or date as the Underwriter and the Company may agree upon, such time and date
of delivery against payment being herein referred to as the "Firm Closing
Date". The Company will make such certificate or certificates for the Firm
Securities available for checking and packaging by the Underwriter at the
offices in New York, New York of the Company's transfer agent or registrar or
of the Underwriter at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection with
the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the Underwriter an option to purchase
the Option Securities. The purchase price to be paid for any Option
Securities shall be the same price per share as the price per share for the
Firm Securities set forth above in paragraph (a) of this Section 3, plus if
the purchase and sale of any Option Securities takes place after the Firm
Closing Date and after the Firm Securities are trading "ex-dividend", an
amount equal to the dividend payable on such Option Securities. The option
granted hereby may be exercised as to all or any part of the Option Securities
from time to time within 30 days after the date of the Prospectus (or, if such
30th day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the New York Stock Exchange is open for trading). The
Underwriter shall not be under any obligation to purchase any of the Option
Securities prior to the exercise of such option. The Underwriter may from
time to time exercise the option granted hereby by giving notice in writing or
by telephone (confirmed in writing) to the Company setting forth the number of
Option Securities as to which the Underwriter is then exercising the option
and the date and time for delivery of and payment for such Option Securities.
Any such date of delivery shall be determined by the Underwriter but shall not
be earlier than two business days or later than five business days after such
exercise of the option and, in any event, shall not be earlier than the Firm
Closing Date. The time and date set forth in such notice, or such other time
on such other date as the Underwriter and the Company may agree upon or as the
Underwriter may determine, is herein called the "Option Closing Date" with
respect to such Option Securities. Upon exercise of the option as provided
herein, subject to the terms and conditions herein set forth, the Company
shall become obligated to sell to the Underwriter, and the Underwriter shall
become obligated to purchase from the Company, the same number of the Option
Securities as to which the Underwriter is then exercising the option. If the
option is exercised as to all or any portion of the Option Securities, one or
more certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section
3, except that reference therein to the Firm Securities and the Firm Closing
Date shall be deemed, for purposes of this paragraph (b), to refer to such
Option Securities and Option Closing Date, respectively.
(c) The Company hereby acknowledges that the wire transfer by or on
behalf of the Underwriter of the purchase price for any Securities does not
constitute closing of a purchase and sale of the Securities. Only execution
and delivery of a receipt for Securities by the Underwriter indicates
completion of the closing of a purchase of the Securities from the Company.
Furthermore, in the event that the Underwriter wires funds to the Company
prior to the completion of the closing of a purchase of Securities, the <PAGE>
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Company hereby acknowledges that until the Underwriter executes and delivers a
receipt for the Securities, by facsimile or otherwise, the Company will not be
entitled to the wired funds and shall return the wired funds to the
Underwriter as soon as practicable (by wire transfer of same-day funds) upon
demand. In the event that the closing of a purchase of Securities is not
completed and the wire funds are not returned by the Company to the
Underwriter on the same day the wired funds were received by the Company, the
Company agrees to pay to the Underwriter in respect of each day the wire funds
are not returned by it, in same-day funds, interest on the amount of such wire
funds in an amount representing the Underwriter's cost of financing as
reasonably determined by the Underwriter.
4. Offering by the Underwriter. Upon your authorization of the release
of the Firm Securities, the Underwriter proposes to offer the Firm Securities
for sale to the public upon the terms set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees with the
Underwriter as follows:
(a) The Company will file the Prospectus and any amendment or supplement
thereto with the Commission in the manner and within the time period required
by Rule 434 and 424(b) under the Act. During any time when a prospectus
relating to the Securities is required to be delivered under the Act, the
Company (i) will comply with all requirements imposed upon it by the Act and
the Exchange Act and the respective rules and regulations of the Commission
thereunder to the extent necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and of the
Prospectus and any Integrated Prospectus, as then amended or supplemented, and
(ii) will not file with the Commission the Prospectus, Term Sheet, any
Integrated Prospectus or any amendment or supplement to such prospectus or any
amendment to the Registration Statement or any Rule 462(b) Registration
Statement of which the Underwriter shall not previously have been advised and
furnished with a copy for a reasonable period of time prior to the proposed
filing and as to which filing the Underwriter shall not have given its
consent. The Company will prepare and file with the Commission, in accordance
with the rules and regulations of the Commission, promptly upon request by the
Underwriter or counsel for the Underwriter, any amendments to the Registration
Statement or amendments or supplements to the Prospectus and any Integrated
Prospectus that may be necessary or advisable in connection with the
distribution of the Securities by the Underwriter, and will use its best
efforts to cause any such amendment to the Registration Statement to be
declared effective by the Commission as promptly as possible. The Company
will advise the Underwriter, promptly after receiving notice thereof, of the
time when the Registration Statement or any amendment thereto has been filed
or declared effective or the Prospectus or any amendment or supplement thereto
has been filed and will provide evidence satisfactory to the Underwriter of
each such filing or effectiveness.
(b) The Company will advise the Underwriter, promptly after receiving
notice or obtaining knowledge thereof, of (i) the issuance by the Commission
of any stop order suspending the effectiveness of the Original Registration
Statement or any Rule 462(b) Registration Statement or any post-effective
amendment thereto, or any order directed at any document incorporated by <PAGE>
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reference in the Registration Statement, the Prospectus and any required
Integrated Prospectus, or any amendment or supplement thereto, or any order
preventing or suspending the use of any Preliminary Prospectus, the Prospectus
and any Integrated Prospectus or any amendment or supplement thereto, (ii) the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, (iii) the institution, threatening or contemplation of any
proceeding for any such purpose or (iv) any request made by the Commission for
amending the Original Registration Statement or any Rule 462(b) Registration
Statement, for amending or supplementing any Preliminary Prospectus, the
Prospectus and any Integrated Prospectus or for additional information. The
Company will use its best efforts to prevent the issuance of any such stop
order and, if any such stop order is issued, to obtain the withdrawal thereof
as promptly as possible.
(c) The Company will arrange for the qualification of the Securities for
offering and sale under the securities or blue sky laws of such jurisdictions
as the Underwriter may designate and will continue such qualifications in
effect for as long as may be necessary to complete the distribution of the
Securities, provided, however, that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the
Act or (ii) the Option Closing Date, any event occurs as a result of which
each of the Prospectus or any Integrated Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or
if for any other reason it is necessary at any time to amend or supplement the
Prospectus or any Integrated Prospectus to comply with the Act, the Exchange
Act or the respective rules or regulations of the Commission thereunder, the
Company will promptly notify the Underwriter thereof and, subject to Section
5(a) hereof, will prepare and file with the Commission, at the Company's
expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus or any Integrated Prospectus that corrects such
statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the Underwriter and
to counsel for the Underwriter a conformed copy of the registration statement
originally filed with respect to the Securities and each amendment thereto (in
each case including exhibits thereto) or any Rule 462(b) Registration
Statement, certified by the Secretary or an Assistant Secretary of the Company
to be true and complete copies thereof as filed with the Commission by
electronic transmission and (ii) so long as a prospectus relating to the
Securities is required to be delivered under the Act, as many copies of each
Preliminary Prospectus, the Prospectus or any Integrated Prospectus or any
amendment or supplement thereto as the Underwriter may reasonably request;
without limiting the application of clause (iii) of this sentence, the
Company, not later than (A) 6:00 PM, New York City time, on the date of
determination of the public offering price, if such determination occurred at
or prior to 10:00 AM, New York City time on such date or (B) 2:00 PM, New York
City time, on the business day following the date of determination of the
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public offering price, if such determination occurred after 10:00 AM, New York
City time, on such date, will deliver to the Underwriter, without charge, as
many copies of the Prospectus and any amendment or supplement thereto as the
Underwriter may reasonably request for purposes of confirming orders that are
expected to settle on the Firm Closing Date.
(f) The Company, as soon as practicable, will make generally available
to its securityholders and to the Underwriter a consolidated earnings
statement of the Company and its Subsidiaries that satisfies the provisions of
Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus and any
Integrated Prospectus.
(h) The Company will not, directly or indirectly, without the prior
written consent of the Underwriter, offer, sell, offer to sell, contract to
sell, pledge, grant any option to purchase or otherwise sell or dispose (or
announce any offer, sale, offer of sale, contract of sale, pledge, grant of
any option to purchase or other sale or disposition) of any shares of Common
Stock or any securities convertible into, or exchangeable or exercisable for,
shares of Common Stock for a period of 45 days after the date hereof; except
pursuant to this Agreement, for issuances pursuant to the exercise of employee
stock options outstanding on the date hereof, the grant of additional options
to purchase Common Stock pursuant to the Company's stock option plans and the
issuance of shares of Common Stock upon the exercise thereof, pursuant to the
Company's dividend reinvestment plan, pursuant to the terms of convertible
securities of the Company outstanding on the date hereof and the issuance of
shares of Series C Cumulative Convertible Preferred Stock under an agreement
with an institutional investor through June 1998 and the issuances of shares
of Common Stock upon conversion thereof.
(i) The Company will not, directly or indirectly, (i) take any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) (A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or (B) pay or agree to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company.
(j) The Company will obtain the agreements described in Section 7(f)
hereof prior to the Firm Closing Date.
(k) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date,
any rumor, publication or event relating to or affecting the Company shall
occur as a result of which in your opinion the market price of the Common
Stock has been or is likely to be materially affected (regardless of whether
such rumor, publication or event necessitates a supplement to or amendment of
the Prospectus and any Integrated Prospectus), the Company will, after notice
from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
<PAGE>
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release or other public statement, reasonably satisfactory to you, responding
to or commenting on such rumor, publication or event.
(l) If the Company elects to rely on Rule 462(b), the Company shall both
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) and pay the applicable fees in accordance with Rule 111
promulgated under the Act by the earlier of (i) 10:00 P.M. Eastern time on the
date of this Agreement and (ii) the time confirmations are sent or given, as
specified by Rule 462(b)(2).
(m) The Company will cause the Securities to be duly authorized for
listing by the New York Stock Exchange prior to the Firm Closing Date.
6. Expenses. The Company will pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto, any
Rule 462(b) Registration Statement, any Preliminary Prospectus, the Prospectus
and any Integrated Prospectus and any amendment or supplement thereto, this
Agreement and any blue sky memoranda, (ii) all arrangements relating to the
delivery to the Underwriter of copies of the foregoing documents, (iii) the
fees and disbursements of the counsel, accountants and any other experts or
advisors retained by the Company, (iv) preparation, issuance and delivery to
the Underwriter of any certificates evidencing the Securities, including
transfer agent's and registrar's fees, (v) the qualification of the Securities
under state securities and blue sky laws, including filing fees and reasonable
fees and disbursements of counsel for the Underwriter relating thereto, (vi)
the filing fees of the Commission relating to the Securities, (vii) the
listing of the Securities on the New York Stock Exchange, (viii) meetings with
prospective investors in the Securities (other than shall have been
specifically approved by the Underwriter to be paid for by the Underwriter)
and (ix) advertising relating to the offering of the Securities (other than
shall have been specifically approved by the Underwriter to be paid for by the
Underwriter). If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriter set
forth in Section 7 hereof is not satisfied, because this Agreement is
terminated pursuant to Section 11(a)(i) or (ii) hereof or because of any
failure, refusal or inability on the part of the Company to perform all
obligations and satisfy all conditions on its part to be performed or
satisfied hereunder other than by reason of a default by the Underwriter, the
Company will reimburse the Underwriter upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by it in connection with the proposed purchase and sale of
the Securities. The Company shall not in any event be liable to the
Underwriter for the loss of anticipated profits from the transactions covered
by this Agreement.
7. Conditions of Underwriters' Obligations. The obligation of the
Underwriter to purchase and pay for the Firm Securities shall be subject, in
the Underwriter's sole discretion, to the accuracy of the representations and
<PAGE>
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warranties of the Company contained herein as of the date hereof and as of the
Firm Closing Date, as if made on and as of the Firm Closing Date, to the
accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company of its covenants and
agreements hereunder and to the following additional conditions:
(a) The Prospectus and any Integrated Prospectus, as the case may be,
and any amendment or supplement thereto shall have been filed with the
Commission in the manner and within the time period required by Rules 434 and
424(b) under the Act; no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no order
directed at any document incorporated by reference in the Registration
Statement, the Prospectus or any Integrated Prospectus or any amendment or
supplement thereto shall have been issued, and no proceeding for that purpose
shall have been instituted or threatened or, to the knowledge of the Company
or the Underwriter, shall be contemplated by the Commission; and the Company
shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement, the Prospectus or
any Integrated Prospectus or otherwise).
(b) The Underwriter shall have received an opinion, dated the Firm
Closing Date, of Swidler & Berlin, Chartered, counsel for the Company, to the
effect that:
(i) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Maryland and is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of the
jurisdictions set forth on Schedule 1. Each of the Subsidiaries has
been duly formed and is validly existing as a general or limited
partnership or corporation in good standing under the laws of its
jurisdiction of organization, and is duly qualified to transact
business and is in good standing under the laws of all the
jurisdictions set forth on Schedule 1;
(ii) the Company and each of the Subsidiaries have all requisite
corporate power to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus, and the Company has corporate power to
enter into this Agreement and to carry out all the terms and
provisions thereof to be carried out by it;
(iii) the issued shares of capital stock of each of the
Subsidiaries that is a corporation have been duly authorized and
validly issued, are fully paid and nonassessable, and all the
partnership interests in each of the Subsidiaries that is a partnershi
p are validly issued and fully paid. Except for directors' qualifying
shares and as otherwise set forth in each of the Prospectus, are owned
beneficially by the Company free and clear of any perfected security
interests or, to the best knowledge of such counsel, any other
security interests, liens, encumbrances, equities or claims;
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(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the issued
shares of stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, have been issued in
compliance with all applicable federal and state securities laws and
were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities;
(v) the Firm Securities have been duly authorized by all necessary
corporate action of the Company and, when issued and delivered to and
paid for by the Underwriter pursuant to this Agreement, will be
validly issued, fully paid and nonassessable; the Securities have been
duly authorized for listing, subject to official notice of issuance,
on the New York Stock Exchange; no holders of outstanding shares of
stock of the Company are entitled as such to any preemptive or other
rights to subscribe for any of the Securities; and no holders of
securities of the Company are entitled to have such securities
registered under the Registration Statement;
(vi) the statements set forth under the heading "Description of
Capital Stock" in the Prospectus, insofar as such statements purport
to summarize certain provisions of the capital stock of the Company,
provide a fair summary of such provisions; and the statements set
forth under the headings "Certain United States Federal Income Tax
Considerations", "Description of Capital Stock - Common Shares -
Restrictions on Ownership and Transfer," "Risk Factors - Certain Tax
Considerations" and "Risk Factors - Investment Company Act Risk" in
the Prospectus, insofar as such statements constitute a summary of the
legal matters, documents or proceedings referred to therein, provide a
fair summary of such legal matters, documents and proceedings,
(vii) the execution and delivery of this Agreement has been duly
authorized by all necessary corporate action of the Company, and this
Agreement has been duly executed and delivered by the Company;
(viii) no legal or governmental proceedings are pending to which
the Company or any of the Subsidiaries is a party or to which the
property of the Company or any of the Subsidiaries is subject that are
required to be described in the Registration Statement and the
Prospectus and are not described therein, and, to the knowledge of
such counsel, no such proceedings have been threatened against the
Company or any of the Subsidiaries or with respect to any of their
respective properties; and, to counsel's knowledge, no contract or
other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as
required;
(ix) the issuance, offering and sale of the Securities to the
Underwriter by the Company pursuant to this Agreement, the compliance
by the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (A)
require the consent, approval, authorization, registration or <PAGE>
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qualification of or with any United States or Maryland governmental
authority, except such as have been obtained and such as may be
required under state securities or blue sky laws, or (B) conflict with
or result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument, known to such counsel,
to which the Company or any of the Subsidiaries is a party or by which
the Company or any of the Subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the
Company or any of the Subsidiaries, or any United States or Maryland
statute or any judgment, decree, order, rule or regulation of any
court or other governmental authority or any arbitrator known to such
counsel and applicable to the Company or any of the Subsidiaries;
(x) the Registration Statement is effective under the Act; any
required filing of the Prospectus pursuant to Rules 434 and 424(b) has
been made in the manner and within the time period required by Rules
434 and 424(b); and no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no
order directed at any document incorporated by reference in the
Registration Statement with the Prospectus or any amendment or
supplement thereto has been issued, and no proceedings for that
purpose have been instituted or, to the best of counsel's knowledge,
threatened or, are contemplated by the Commission;
(xi) The Company is organized and has been operated in conformity
with the requirements for qualification and taxation as real estate
investment trust ("REIT") under the Internal Revenue Code of 1986, as
amended (the "Code"), for each of its taxable years beginning with its
taxable year ended December 31, 1989, and its current organization and
method of operation will enable it to continue to meet the
requirements for qualification as a REIT;
(xii) Neither the Company nor any of its Subsidiaries is required
to register as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(xiii) the Registration Statement originally filed with respect to
the Securities and each amendment thereto, the Prospectus (in each
case, including the documents incorporated by reference therein but
not including the financial statements and other financial information
contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable
requirements of the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder; and
(xiv) if the Company elects to rely on Rule 434, the Prospectus is
not "materially different", as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time of its
effectiveness or any effective post-effective amendment thereto
(including such information that is permitted to be omitted pursuant
to Rule 430A).
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Such counsel shall also state, in addition to the foregoing opinions, no facts
have come to our attention which lead us to believe that the Registration
Statement, or any amendment thereto, as of the time it became effective under
the 1933 Act, and at the Firm Closing Date, contained or contains an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus, as amended or supplemented, as of its date and at the
Firm Closing Date, included or includes an untrue statement of a material fact
or omitted or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any jurisdiction other than the District of Columbia or
the Federal Law of the United States or the General Corporate Law of the State
of Maryland, to the extent satisfactory in form and scope to counsel for the
Underwriter, upon the opinion of local counsel. The foregoing opinion shall
also state that the Underwriter is justified in relying upon such opinion of
local counsel, and copies of such opinion shall be delivered to the
Underwriter and its counsel.
References to the Registration Statement and the Prospectus and any
Integrated Prospectus in this paragraph (b) shall include any amendment or
supplement thereto at the date of such opinion.
(c) The Underwriter shall have received an opinion, dated the Firm
Closing Date, of Hogan & Hartson L.L.P., counsel for the Underwriter, with
respect to the issuance and sale of the Firm Securities, the Registration
Statement and the Prospectus or any Integrated Prospectus, and such other
related matters as the Underwriter may reasonably require, and the Company
shall have furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters. In
rendering such opinion, such counsel may rely as to all matters of law upon
the opinions of such counsel referred to in paragraph (b) above.
(d) The Underwriter shall have received from Arthur Andersen, LLP a
letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Underwriter, to the effect
that:
(i) they are independent accountants with respect to the Company
and its consolidated Subsidiaries within the meaning of the Act, the
Exchange Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules and pro forma financial statements examined
by them and included in the Registration Statement and the Prospectus
and any Integrated Prospectus comply in form in all material respects
with the applicable accounting requirements of the Act, the Exchange
Act and the related published rules and regulations thereunder;
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(iii) on the basis of their limited review in accordance with
standards established by the American Institute of Certified Public
Accountants of any interim unaudited consolidated condensed financial
statements of the Company and its consolidated Subsidiaries as
indicated in their report[s] incorporated in the Registration
Statement, the Prospectus and any Integrated Prospectus, a reading of
the latest available interim unaudited consolidated condensed
financial statements of the Company and its consolidated Subsidiaries,
and of the unaudited consolidated financial statements of the Company
and its consolidated Subsidiaries for the periods from which such
amounts are derived, carrying out certain specified procedures (which
do not constitute an examination made in accordance with generally
accepted auditing standards) that would not necessarily reveal matters
of significance with respect to the comments set forth in this
paragraph (iii), a reading of the minute books of the shareholders,
the board of directors and any committees thereof of the Company and
each of its consolidated Subsidiaries, and inquiries of certain
officials of the Company and its consolidated subsidiaries who have
responsibility for financial and accounting matters, nothing came to
their attention that caused them to believe that:
(A) the unaudited consolidated condensed financial statements of
the Company and its consolidated Subsidiaries included in the
Registration Statement, the Prospectus and any Integrated Prospectus
do not comply in form in all material respects with the applicable
accounting requirements of the Act, the Exchange Act and the related
published rules and regulations thereunder, or are not in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements included in the Registration Statement and the
Prospectus and any Integrated Prospectus;
(B) at a specific date not more than five business days prior to
the date of such letter, there were any changes in the capital stock
or long-term debt of the Company and its consolidated Subsidiaries or
any decreases in net current assets or stockholders' equity of the
Company and its consolidated Subsidiaries, in each case compared with
amounts shown on the September 30, 1997 consolidated balance sheet
included in the Registration Statement and the Prospectus and any
Integrated Prospectus, or for the period from October 1, 1997 to such
specified date there were any decreases in sales, net revenues, net
income before income taxes or total or per share amounts of net
income of the Company and its consolidated Subsidiaries except in all
instances for changes, decreases or increases set forth in such
letter;
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information that are derived from the general accounting
records of the Company and its consolidated Subsidiaries and are
included in the Registration Statement, the Prospectus and any
Integrated Prospectus, and have compared such amounts, percentages and
financial information with such records of the Company and its <PAGE>
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consolidated Subsidiaries and with information derived from such
records and have found them to be in agreement, excluding any
questions of legal interpretation; and
(v) on the basis of a reading of the unaudited pro forma
consolidated condensed financial statements included in the
Registration Statement, the Prospectus and any Integrated Prospectus,
carrying out certain specified procedures that would not necessarily
reveal matters of significance with respect to the comments set forth
in this paragraph (v), inquiries of certain officials of the Company
and its consolidated Subsidiaries who have responsibility for
financial and accounting matters and proving the arithmetic accuracy
of the application of the pro forma adjustments to the historical
amounts in the unaudited pro forma consolidated condensed financial
statements, nothing came to their attention that caused them to
believe that the unaudited pro forma consolidated condensed financial
statements do not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or
that the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of such statements.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriter that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Underwriter deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Underwriter, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement, the Prospectus and any
Integrated Prospectus in this paragraph (d) with respect to either letter
referred to above shall include any amendment or supplement thereto at the
date of such letter.
(e) The Underwriter shall have received a certificate, dated the Firm
Closing Date, of the Chairman of the Board or the President and the Chief
Financial Officer of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading, the Prospectus, as amended or supplemented as
of the Firm Closing Date, does not include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; and the Company has performed
all covenants and agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Firm Closing Date;
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(ii) no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto and no order
directed at any document incorporated by reference in the Registration
Statement, the Prospectus or any amendment or supplement thereto has
been issued, and no proceedings for that purpose have been instituted
or threatened or, to the best of the Company's knowledge, are
contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the
Company nor any of its Subsidiaries has sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition (financial or otherwise), management, business prospects,
net worth or results of operations of the Company or any of its
Subsidiaries, except in each case as described in or contemplated by
the Prospectus and any Integrated Prospectus.
(f) The Underwriter shall have received from each person who is a
director or executive officer of the Company an agreement to the effect that
such person will not, directly or indirectly, without the prior written
consent of the Underwriter, offer, sell, offer to sell, contract to sell,
pledge, grant any option to purchase or otherwise sell or dispose (or announce
any offer, sale, offer of sale, contract of sale, pledge, grant of an option
to purchase or other sale or disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock for a period of 45 days after the date of this Agreement;
provided, however, that the foregoing agreement and representation shall not
apply to gifts or charitable contributions of Common Stock made by the
undersigned if the recipient of such gift or charitable contribution agrees to
be bound by the terms hereof.
(g) On or before the Firm Closing Date, the Underwriter and counsel
for the Underwriter shall have received such further certificates, documents
or other information as they may have reasonably requested from the Company.
(h) Prior to the commencement of the offering of the Securities, the
Securities shall have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Underwriter and
counsel for the Underwriter. The Company shall furnish to the Underwriter
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Underwriter and counsel for the Underwriter shall
reasonably request.
<PAGE>
<PAGE>
The obligation of the Underwriter to purchase and pay for any Option
Securities shall be subject, in its discretion, to each of the foregoing
conditions to purchase the Firm Securities, except that all references to the
Firm Securities and the Firm Closing Date shall be deemed to refer to such
Option Securities and the related Option Closing Date, respectively.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities, joint or several, to which the Underwriter or
such controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company in Section 2 of this Agreement;
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus and any
Integrated Prospectus or any amendment or supplement thereto or (B)
any application or other document, or any amendment or supplement
thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in
order to qualify the Securities under the securities or blue sky laws
thereof or filed with the Commission or any securities association or
securities exchange (each an "Application");
(iii) the omission or alleged omission to state in the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus and any Integrated Prospectus or any amendment or
supplement thereto, or any Application a material fact required to be
stated therein or necessary to make the statements therein not
misleading; or
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including without
limitation, slides, videos, films and tape recordings
and will reimburse, as incurred, the Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by
the Underwriter or such controlling person in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or
is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in such Registration Statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus and any Integrated
Prospectus or any amendment or supplement thereto, or any Application in
<PAGE>
<PAGE>
reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use therein. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have. The Company will not, without the prior written consent
of the Underwriter, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not
the Underwriter or any person who controls any such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a
party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of the Underwriter
and such controlling persons from all liability arising out of such claim,
action, suit or proceeding.
(b) The Underwriter will indemnify and hold harmless the Company, each
of its directors, each of its officers who signed the Registration Statement
and each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which the Company or any such director,
officer or controlling person may become subject under the Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any Integrated Prospectus or any amendment or supplement
thereto, or any Application or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus, Integrated Prospectus or any amendment or supplement thereto, or
any Application or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by
the Underwriter specifically for use therein; and, subject to the limitation
set forth immediately preceding this clause, will reimburse, as incurred, any
legal or other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability which
the Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 8, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party; provided, however, that if the defendants in any such <PAGE>
<PAGE>
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or
more legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such
action on behalf of such indemnified party or parties and such indemnified
party or parties shall have the right to select separate counsel to defend
such action on behalf of such indemnified party or parties. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in
any one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Underwriter in the case of paragraph (a) of this Section 8,
representing the indemnified parties under such paragraph (a) who are parties
to such action or actions) or (ii) the indemnifying party does not promptly
retain counsel satisfactory to the indemnified party or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not
be liable for the costs and expenses of any settlement of such action effected
by such indemnified party without the consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient, for
any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriter on the other shall be deemed to be in the same proportion
as the total proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions
received by the Underwriter. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
<PAGE>
<PAGE>
state a material fact relates to information supplied by the Company or the
Underwriter, the parties' relative intents, knowledge, access to information
and opportunity to correct or prevent such statement or omission, and any
other equitable considerations appropriate in the circumstances. The Company
and the Underwriter agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (d). Notwithstanding any
other provision of this paragraph (d), the Underwriter shall not be obligated
to make contributions hereunder that in the aggregate exceed the total public
offering price of the Securities purchased by the Underwriter under this
Agreement, less the aggregate amount of any damages that the Underwriter has
otherwise been required to pay in respect of the same or any substantially
similar claim, and no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this paragraph (d), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as the Company.
9. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and
the Underwriter set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the
Company, any of its officers or directors, the Underwriter or any controlling
person referred to in Section 8 hereof and (ii) delivery of and payment for
the Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
10. Information Supplied by the Underwriter. The statements set
forth in the last paragraph on the front cover page and under the heading
"Underwriting" in any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus (to the extent such statements relate to the Underwriter)
constitute the only information furnished by the Underwriter to the Company
for the purposes of Sections 2(b) and 8 hereof. The Underwriter confirms that
such statements (to such extent) are correct.
11. Termination.
(a) This Agreement may be terminated with respect to the Firm Securities
or any Option Securities in the sole discretion of the Underwriter by notice
to the Company given prior to the Firm Closing Date or the related Option
Closing Date, respectively, in the event that the Company shall have failed,
refused or been unable to perform all obligations and satisfy all conditions
on its part to be performed or satisfied hereunder at or prior thereto or, if
at or prior to the Firm Closing Date or such Option Closing Date,
respectively:<PAGE>
<PAGE>
(i) the Company or any of its Subsidiaries shall have, in the sole
judgment of the Underwriter, sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or
any development involving a prospective material adverse change
(including without limitation a change in management or control of the
Company), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
Subsidiaries, except in each case as described in or contemplated by
the Prospectus (exclusive of any amendment or supplement thereto);
(ii) trading in the Common Stock shall have been suspended by the
Commission or the New York Stock Exchange;
(iii) trading in securities generally on the New York Stock
Exchange shall have been suspended or minimum or maximum prices shall
have been established on such exchange,
(iv) a banking moratorium shall have been declared by New York or
United States authorities; or
(v) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U. S. financial markets that, in
the sole judgment of the Underwriter, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended
as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except as provided in
Section 9 hereof.
12. Notices. All communications hereunder shall be in writing and,
if sent to the Underwriter, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, One New York Plaza, New York, New York 10292, Attention: Equity
Transactions Group, with a copy to Hogan & Hartson L.L.P., 555 Thirteenth
Street, N.W., Washington, D.C. 20004, Attention: James E. Showen, and if
sent to the Company, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to the Company at CRIIMI MAE Inc.,
11200 Rockville Pike, Rockville, Maryland 20852, Attention: Cynthia O.
Azzara, Senior Vice President, with a copy to Swidler & Berlin, Chartered,
3000 K Street, N.W., Washington, D.C. 20007, Attention: Morris F. DeFeo, Jr.
<PAGE>
<PAGE>
13. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the Underwriter, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 8 of this Agreement shall
also be for the benefit of any person or persons who control the Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriter contained in Section 8 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from
the Underwriter shall be deemed a successor because of such purchase.
14. Applicable Law. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
<PAGE>
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and
the Underwriter.
Very truly yours,
CRIIMI MAE INC.
By: /s/ Cynthia O. Azzara
--------------------------
Title: Chief Financial Officer/
Senior Vice President/Treasurer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Jean-Claude Canfin
------------------------------
Jean-Claude Canfin
Managing Director
<PAGE>
<PAGE>
SCHEDULE 1
SUBSIDIARIES
Name Jurisdiction of Incorporation or Formation
- ----- -------------------------------------------
CRI Liquidating REIT, Inc. Articles of Dissolution filed
CRIIMI, Inc. Maryland
CRIIMI MAE Management, Inc. Maryland
CRIIMI MAE Financial Corporation Maryland
CRIIMI MAE Financial Corporation II Maryland
CRIIMI MAE Financial Corporation III Maryland
CRIIMI MAE Services Limited Partnership Maryland
CRIIMI MAE Services, Inc. Maryland
CRIIMI MAE Holdings, L. P. Delaware
CRIIMI MAE Holdings, Inc. Delaware
CRIIMI MAE QRS 1, Inc. Delaware
[LETTERHEAD OF SWIDLER & BERLIN, CHARTERED]
January 23, 1998
CRIIMI MAE Inc.
The CRI Building
11200 Rockville Pike
Rockville, MD 20852
RE: Sale of Common Stock Pursuant to Shelf Registration Statement
Gentlemen:
We have acted as counsel to CRIIMI MAE Inc., a Maryland corporation (the
"Company"), in connection with the filing of a registration statement on Form
S-3 with the Securities and Exchange Commission on October 21, 1997, as well
as a prospectus dated October 28, 1997 (the "Prospectus") included therein
(together the "Registration Statement"), for the registration under the
Securities Act of 1933, as amended, of the sale of an indeterminate number of
shares of the Company's common stock, par value $.01 per share; the Company's
preferred stock, par value $.01 per share; the Company's debt securities; and
the Company's warrants pursuant to the Registration Statement, as well as a
Prospectus Supplement to the Prospectus dated January 22, 1998 (the Prospectus
Supplement") relating to the offering of 2.1 million shares of the Company's
common stock (the "Offering"). In connection with the Offering, we have been
asked to provide you with an opinion regarding certain United States federal
income tax matters related to the Company.
In issuing this opinion, we have examined (1) the Registration Statement;
(2) the Prospectus Supplement; (3) the Company's Articles of Incorporation, as
amended; and (4) such other corporate records, including the resolution of the
Company's Board of Directors, and such other documents as we have deemed
necessary in order to express the opinions set forth below. In our
examination we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
of all originals of all documents submitted to us as copies. The opinions set
forth in this letter are premised on certain written representations of the
Company contained in a letter to us of even date herewith.
In rendering our opinion, we have considered the applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations promulgated thereunder ("Treasury Regulations"), relevant judicial
authorities, rulings of the United States Internal Revenue Service (the
"Service"), and such other authorities as we deemed relevant. The Code,
Treasury Regulations, judicial decisions, rulings and other authorities that
we have considered are subject to change at any time and with retroactive
effect. A change in any of the authorities upon which our opinion is based
could affect our conclusions. Moreover, relevant laws could change in a <PAGE>
<PAGE>
CRIIMI MAE Inc.
January 23, 1998
Page Two
manner that could adversely affect the Company or its stockholders. We
undertake no obligation to inform you of any such change in the law. We have
not been requested to opine, and we have not opined, as to any issues other
than those expressly set forth herein. Capitalized terms used in this opinion
letter and not otherwise defined are as defined in the Prospectus Supplement.
The Company is intended to qualify as a real estate investment trust
("REIT") under the Code. Based upon and subject to the foregoing, it is our
opinion that:
(1) the Company was organized and has operated in conformity with the
requirements for qualification and taxation as a REIT under the Code
for each of the taxable years it has been in existence, and the
Company's current organization and method of operation will enable it
to continue to meet the requirements for qualification as a REIT for
each of its subsequent taxable years; and
(2) the discussions in the Prospectus Supplement under the headings
"CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS" and "RISK
FACTORS - CERTAIN TAX CONSIDERATIONS" are correct in all material
respects and fairly summarize the United States federal income tax
considerations that are likely to be material to a holder of common
stock of the Company.
The Company's qualification as a REIT under the Code will depend upon
the Company's ability to meet, through actual operating results, distribution
levels, diversity of stock ownership and the various income and asset
qualification tests imposed under the Code. Such operating results may not be
reviewed by us as counsel, and accordingly, no assurance can be given that the
actual results of the Company's operations for any one taxable year will
satisfy the requirements under the Code for REIT qualification. Moreover,
certain aspects of the Company's operations have not been considered by the
courts or the Service. There can be no assurance that a court or the Service
will agree with our opinion. In addition, qualification as a REIT depends on
future transactions and events that cannot be known at this time.
For a discussion relating the law to the facts, and the legal analysis
underlying the opinions set forth in this letter, we incorporate by reference
the discussion of federal income tax issues in the sections of the Prospectus
Supplement under the headings "CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS" and "RISK FACTORS - CERTAIN TAX CONSIDERATIONS."
We hereby consent to the filing of this opinion as an exhibit to the
Prospectus Supplement and to all references to our firm in the Prospectus
Supplement. In giving this consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the
Securities Act or the rules promulgated thereunder.
<PAGE>
<PAGE>
CRIIMI MAE Inc.
January 23, 1998
Page Two
This opinion is rendered solely for your benefit in connection with the
transactions described above upon the understanding that we are not hereby
assuming any professional responsibility to any other person. Except as
provided in the preceding paragraph, this opinion may not be relied upon by
any other person and this opinion may not be used, disclosed, quoted, filed
with a governmental agency or otherwise referred to without our express prior
written consent. The opinions expressed in this letter are limited to the
matters expressly set forth herein, and no other opinions should be inferred
beyond the matters expressly stated herein.
Very truly yours,
/s/ SWIDLER & BERLIN, CHARTERED
SWIDLER & BERLIN, CHARTERED
