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Exhibit 2.3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
Greenbelt Division
___________________________________________
)
)
In re )
)
CRIIMI MAE Inc., et al., ) Chapter 11
) Case Nos. 98-2-3115(DK)
Debtors. ) through 98-2-3117(DK)
) (Jointly Administered)
)
___________________________________________
PRAECIPE FILING AMENDED EXHIBIT 2 TO THE DEBTORS'
THIRD AMENDED JOINT PLAN OF REORGANIZATION
In connection with the hearing on approval of the Debtors'
Second Amended Joint Disclosure Statement (the "Disclosure Statement") held on
April 25, 2000, CRIIMI MAE Inc. ("CMI"), CRIIMI MAE Holdings II, L.P.
("Holdings") and CRIIMI MAE Management, Inc. ("Management") (collectively, the
"Debtors") and the Official Committee of Equity Security Holders of CMI (the
"Equity Committee"), by and through their undersigned counsel, hereby file this
Praecipe Filing Amended Exhibit 2 to the Debtors' Third Amended Joint Plan of
Reorganization (the "Plan").
Amended Exhibit 2 filed herewith will be substituted into the
Plan as Exhibit 2 thereto in replacement of incomplete Exhibit 2 filed as part
of the Plan on April 25, 2000. The Plan to be sent out to impaired classes of
creditors and equity security
<PAGE>
holders for voting and to be included as Exhibit A to the Disclosure Statement
will be the Plan including Amended Exhibit 2 filed herewith.
Dated: July 14, 2000
VENABLE, BAETJER AND AKIN, GUMP, STRAUSS,
HOWARD, LLP HAUER & FELD, L.L.P.
By: /S/ By: /S/
-------------------------- -----------------------
Richard L. Wasserman Stanley J. Samorajczyk
Federal Bar No. 02784 Federal Bar No. 03113
Carrie B. Weinfeld 1333 New Hampshire Ave., NW
Federal Bar No. 25365 Washington, D.C. 20036
1800 Mercantile Bank and Trust Building (202) 887-4000
Two Hopkins Plaza
Baltimore, Maryland 21201 Co-Counsel for CRIIMI MAE Inc.
(410) 244-7400 and CRIIMI MAE Holdings II, L.P.,
Debtors-in-Possession
Co-Counsel for CRIIMI MAE Inc.
and CRIIMI MAE Holdings II, L.P.,
Debtors-in-Possession
SHULMAN, ROGERS, GANDAL, COVINGTON & BURLING
PORDY & ECKER, P.A.
By: /S/ By: /S/
-------------------------- -----------------------
Morton A. Faller Michael St. Patrick Baxter
Federal Bar No. 01488 Federal Bar No. 09694
11921 Rockville Pike Dennis B. Auerbach
Third Floor Federal Bar No. 09290
Rockville, MD 20852-2753 1201 Pennsylvania Avenue, N.W.
(301) 231-0928 Washington, D.C. 20044
(202) 662-6000
Counsel for CRIIMI MAE
Management, Inc., Counsel for the Official Committee
Debtor-in-Possession of Equity Security Holders of
CRIIMI MAE Inc.
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AMENDED EXHIBIT 2 TO THE
DEBTORS' THIRD AMENDED JOINT PLAN OF REORGANIZATION
<PAGE>
AMENDED TERMS OF CHAPTER 11 PLAN
TREATMENT OF CLASS A9 AND
CLASS A10 CLAIMS BY THE DEBTORS'
THIRD AMENDED JOINT PLAN OF REORGANIZATION
CRIIMI MAE Inc. ("CMI"), the Official Committee of Equity Security
Holders of CRIIMI MAE Inc. (the "Equity Committee") and the Official Committee
of Unsecured Creditors of CRIIMI MAE Inc. (the "Unsecured Committee") agree to
the following terms and conditions for treatment of Class A9 and Class A10
Claims in a Debtors' Third Amended Joint Plan of Reorganization to be filed by
CMI and the Equity Committee. This Term Sheet is subject to the filing of a Plan
of Reorganization and Disclosure Statement consistent with the terms and
conditions set forth herein and to agreement upon the form and substance of the
New Debt Documents (as hereinafter defined).
OVERVIEW: Subject to the conditions outlined in this Term
Sheet, the Unsecured Committee, the Equity
Committee and CMI will jointly support a Third
Amended Plan of Reorganization filed by CMI,
CRIIMI MAE Management, Inc., CRIIMI MAE
Holdings II L.P. (together, the "Debtors") (the
"Third Amended Plan") and the Equity Committee
providing for the Unsecured Creditors of CMI to
receive in respect of the Class A9 (old senior
note claims) and Class A10 (CMI general
unsecured claims) (collectively, the "Claims"),
(a) an initial cash payment in reduction of the
Claims on the effective date of the Third
Amended Plan (the "Effective Date"), as
described in the section of this Term Sheet
captioned "Initial Paydown"; (b) treatment of
the Claims as described in this Term Sheet; and
(c) the receipt by holders of the Claims on the
Effective Date, of new secured debt of CMI on
the terms and conditions described in this Term
Sheet (the "New Debt"). The notes and other
documents that will evidence and secure the New
Debt are sometimes referred to in this Term
Sheet, collectively, as the "New Debt
Documents." The Debtors' Plan, including the
Merrill/GACC term sheet attached thereto, shall
be modified to make them consistent with the
terms set forth in this Term Sheet.
INITIAL PAYDOWN: $75 million in immediately available funds,
payable on the Effective Date (i) first, to pay
in full all Allowed Claims in the Class A10
Convenience Class and (ii) second, in reduction
of the Claims, pari passu to all remaining
Class A9 and A10 claimants, in proportion to
the respective allowed amount of such Claims.
The allowed amount of Class A9 and A10
Unsecured Claims shall be calculated to include
prepetition and
EXHIBIT 2
_________
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postpetition interest (through the Effective
Date) using the contractual non-default rate of
interest for those creditors who have a
contract; the invoice rate (capped at 9-1/8%)
for those creditors with an invoice rate; and
6% for all others (the Allowed Claims,
including prepetition and postpetition interest
as described above, is referred to hereinafter
as the "Allowed Unsecured Claims"). The allowed
claims of CRIIMI MAE Management, Inc. shall not
be paid out of the proceeds of the Initial
Paydown and the holders of those claims shall
not receive any of the New Debt.
BORROWER: The New Debt will be a full recourse obligation
of CMI.
PRINCIPAL The original principal amount of the New Debt
AMOUNT: will be divided into two notes. The first note
shall be in the amount of $105 million
(hereinafter referred to as "Note A"). The
second note (hereinafter referred to as "Note
B") shall be equal to the Allowed Unsecured
Claims minus (b) $75 million, minus (c) $105
million which is the amount of Note A.
COLLATERAL: Consistent with the terms described on Schedule
I hereto (the "Collateral Schedule"), as
previously agreed to between the Unsecured
Committee and CMI, Note A will be secured by
first priority liens and security interests in
the "Miscellaneous Collateral" listed on the
attached Collateral Schedule, which includes,
inter alia, the AIM Fund Proceeds, Insured
Mortgage Proceeds (CMO I-III) and Mezzanine
Loans, and Brick Church (if not sold prior to
the Effective Date) (collectively referred to
hereinafter as the "Miscellaneous Collateral").
Note A shall also be secured by a first
priority lien and security interest in the CBO
I and Nomura unrated ("CBOI/Nomura Assets"), as
set forth on the Collateral Schedule, pursuant
to a collateral trust or similar arrangement
acceptable to CMI, MLMCI/GACC, the Equity
Committee and the Unsecured Committee, which
shall provide, inter alia, that a designee,
assignee or successor of Merrill Lynch Mortgage
Capital Inc. ("MLMCI" or "Merrill") and German
American Capital Corporation ("GACC") will
serve as collateral trustees for the benefit of
holders of Note A providing for payment of the
proceeds of any sale of the CBOI/Nomura Assets
to the holders of Note A and, after Note A has
been fully repaid, Note B. The Collateral Trust
documents shall provide that the holders of
Note A and the holders of Note B will not be
permitted to take actions (i) adverse to
MLMCI/GACC
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in any state court enforcement proceeding with
respect to the CBOI/Nomura Assets or (ii) for
the specific purpose of delaying or impeding
the sale of the CBOI/Nomura Assets by
MCMCI/GACC, so long as MLMCI/GACC are acting in
accordance with their obligations under the
Plan, the Collateral Trust documents, and
applicable law. The holders of Note A and Note
B shall also not have the right to foreclose or
otherwise enforce their liens against the CBO
I/Nomura Assets without the consent of
MLMCI/GACC. As set forth on the Collateral
Schedule, the holders of Note A shall also
receive a "soft second lien" against the assets
listed on Schedule A to the MLMCI/GACC Term
Sheet ("MLMCI/GACC Assets") and (if possible) a
second lien against the CMO IV Assets, which
are also listed on the attached Collateral
Schedule. The "soft second lien" means that the
holder shall not be permitted to take any
action (including the right to foreclose or
otherwise enforce its lien unless the holder
obtains the consent of the holder of the first
priority lien) (i) adverse to MLMCI/GACC in any
state court enforcement proceeding with respect
to the MLMCI/GACC Assets or (ii) for the
specific purpose of delaying or interfering
with the rights of MLMCI/GACC with respect to
the MLMCI/GACC Assets, so long as MLMCI/GACC
are acting in accordance with their obligations
under the Plan, the Collateral Trust documents,
and applicable law. The rights of the holders
of the soft second lien shall include the right
to credit bid in the event of a foreclosure
sale by the holders of the first lien.
The Collateral Trust or similar arrangement for
the CBOI/Nomura Assets shall terminate if and
when (a) Merrill/GACC have been repaid their
debt in full or such debt is otherwise
satisfied (provided, however, the Collateral
Trust shall continue if the Merrill/GACC debt
is refinanced until the refinance lender's debt
is fully satisfied), or (b) Merrill/GACC sell,
take for its own account or otherwise disposes
of the MLMCI/GACC Assets and are not selling
the CBOI/Nomura Assets in accordance with the
Collateral Trust documents. In such event, the
CBOI/Nomura Assets will be treated for all
purposes except for purposes of amortization as
Miscellaneous Assets. There will be no other
junior liens on the CBOI/Nomura Assets;
provided, however that MLMCI/GACC may hold a
subordinate beneficial interest in the
Collateral Trust with rights similar to a soft
second lien.
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The holders of Note A shall not have the right
to liquidate the MLMCI/GACC Assets or the
CBOI/Nomura Assets without the consent of the
holder of the MLMCI/GACC note, but (a) if the
CBOI/Nomura Assets are sold for any reason, the
holders of Note A (and, once Note A has been
repaid, Note B) shall receive all proceeds (net
of costs of sale) thereof, until the A and B
Notes are fully repaid, and (b) if the
MLMCI/GACC Assets are sold to a third party for
any reason, the holders of Note A (and, once
Note A has been repaid, Note B) shall receive
all proceeds, net of costs of sale and amounts
necessary to repay the claims of Merrill and
GACC secured by the MLMCI/GACC Assets, until
Note A and Note B are fully repaid, and (c) the
holders of Note A and Note B shall be entitled
to credit bid at any foreclosure sale of assets
in which they have a security interest.
If Merrill/GACC take back the MLMCI/GACC Assets
(in any form) or such assets are sold to an
affiliate of Merrill or GACC, the Holders of
Note A (and once Note A has been repaid, Note
B) shall receive the difference between (a) the
value of such assets net of costs of sales, if
any, at the time they are sold or taken back,
and (b) the outstanding amount of the principal
and interest owed by CMI to Merrill and GACC
under the Plan and secured by such assets.
If the Merrill/GACC claims and their interest
in the MLMCI/GACC Assets is documented as a
repurchase agreement pursuant to the Plan, then
Note A and Note B, and the related
documentation, shall assure that in the event
Merrill and/or GACC exercise their rights under
the repurchase agreements, the holders of Note
A and Note B, as applicable, receive the full
difference between the value, net of costs of
sale, if any, of the MLMCI/GACC Assets (as
determined by a third-party valuation) and the
outstanding amount of the principal and
interest owed by CMI to MLMCI/GACC under the
Plan and shall provide the holders of Note A
and Note B with rights equivalent to soft
second and third liens on the Merrill/GACC
Assets had the Merrill/GACC claims been
documented as a secured loan transaction. If
the relevant Repurchase Agreement is deemed to
be a secured loan transaction, the interest of
holders of Note A and Note B in the
Merrill/GACC Assets shall be treated as soft
second and third liens, respectively. In the
event that CMI exercises its right to
repurchase the MLMCI/GACC Assets, and the
MLMCI/GACC debt is not refinanced, the holders
of Note A and Note B shall have respectively
first and
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second priority liens on such assets, with such
assets thereafter treated for all purposes
except for purposes of amortization as
Miscellaneous Assets.
Any sale or other disposition of the
CBOI/Nomura Assets and/or the MLMCI/GACC Assets
shall be on commercially reasonable terms. If
the CBOI/Nomura Assets (or any of them) are
sold along with the MLMCI/GACC Assets (or any
of them), there shall be a fair allocation of
the net proceeds from such sale.
If the debt owing to MLMCI/GACC is refinanced,
the holders of Note A and Note B will continue
to have second and third liens respectively on
the MLMCI/GACC Assets junior to a first lien
held by the refinance lender, a similar
collateral trust or similar arrangement on the
CBOI/Nomura Assets with the refinance lender
and the same rights that they have vis-a-vis
MLMCI/GACC under the Plan. The amount of such
first lien will not be greater than the
outstanding balance of the debt owing to
MLMCI/GACC at the time of the refinance unless
such greater amount is paid to the holders of
Note A or Note B.
The holders of Note B shall receive a lien and
security interest on all assets pledged to the
holders of Note A subordinate to the prior
liens and security interests of Note A,
provided that the holders of Note B shall be
prohibited from exercising their lien rights
until Note A has been paid in full and an Event
of Default has occurred.
MATURITY DATE: Note A - business day immediately preceding the
fifth (5th) anniversary of the Effective Date.
Note B - business day immediately preceding the
sixth (6th) anniversary of the Effective Date.
INTEREST RATE: Note A - 11.75% cash coupon paid quarterly in
arrears.
Note B - 13% cash coupon, paid semi-annually in
arrears through the fifth anniversary of said
Note with such interest for the sixth year of
said Note payable one-half on the fifth
anniversary of said Note and one-half on the
Maturity Date, plus a 7% accreting coupon
accreting semi-annually in arrears paid on the
Maturity Date.
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SCHEDULED In addition to interest on the New Debt
PRINCIPAL specified in the section of this Term Sheet
PAYDOWN: captioned "Interest Rate" (the "Interest"), the
holders of Note A will also be entitled to
receive all cash flow received directly or
indirectly by CMI (provided however that the
income, expenses and assets of CRIIMI MAE
Services Limited Partnership ("CMSLP") shall
stay with CMSLP) including interest, return of
principal, fees, and all other payments payable
on or arising from the Miscellaneous
Collateral, which shall be paid to the holders
of Note A quarterly in arrears. In addition,
the holders of Note A shall receive scheduled
amortization of $5 million payable on or before
24 months from the Effective Date of the Plan,
$15 million payable on or before 36 months from
the Effective Date of the Plan, and $15 million
payable on or before 48 months from the
Effective Date of the Plan. CMI must pay as
much of each scheduled amortization payment as
it has the ability to pay after CMI pays the
other obligations established by this Term
Sheet and Plan, including maintenance of CMI's
$7.5 million working capital reserve.
The holders of Note B shall not receive any
scheduled amortization payments.
LOAN FEES: If CMI has not paid the entire amount of the
New Debt (i) within 48 months of the Effective
Date, CMI shall pay the holders of Note A and
Note B a Loan Fee equivalent to 1.5% of their
respective portions of the remaining principal
balance of the New Debt at the end of the 48th
month after the Effective Date; (ii) within 54
months of the Effective Date, CMI shall pay the
holders of Note A and Note B a Loan Fee
equivalent to 1.5% of their respective portions
of the remaining principal balance of the New
Debt at the end of the 54th month after the
Effective Date; (iii) within 60 months of the
Effective Date, CMI shall pay the holders of
Note A and Note B a Loan Fee equivalent to 1.5%
of their respective portion of the remaining
principal balance of the New Debt at the end of
the 60th month after the Effective Date; and
(iv) within 66 months of the Effective Date,
CMI shall pay the holders of Note B a Loan Fee
equivalent to 1.5% of their respective portion
of the remaining principal balance of the New
Debt at the end of the 66th month after the
Effective Date. Failure to make a loan fee
payment shall result in the amount of that
payment being proportionally added to the
principal balance of Note A and Note B and
shall not otherwise constitute a default under
Note A or Note B, provided
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<PAGE>
that CMI must make the loan fee payments on
time if after paying the other obligations
permitted by this Term Sheet and the Plan,
including CMI's $7.5 million working capital
reserve CMI has the ability to do so. At the
option of the Unsecured Committee made prior to
the Effective Date, the loan fees for Note B
may be converted to an increase in the interest
rate on Note B, which would be effective on the
same dates as the loan fees would become due
and in an amount such that the increase in
interest rate would have no economic
consequences when compared to the alternative
of paying the loan fee.
EQUITY Subject to the provisions of this paragraph and
INVESTMENT: the other provisions of this Term Sheet CMI
shall be entitled to utilize the proceeds of
any equity investments (including the proceeds
from the sale of assets purchased with proceeds
of equity investments) without restriction
provided, however, that the first $10 million
of net proceeds from any new equity investment
will be paid promptly upon its receipt by CMI
to the holders of Note A (or Note B, if Note A
has been fully repaid) as an additional
principal paydown.
OPTIONAL Prior to the respective Maturity Dates for the
PREPAYMENT: A Note and the B Note, CMI may prepay the New
Debt in whole or in part without any penalty or
premium.
EVENTS OF DEFAULT: Failure to pay the holders of Note A any of the
Scheduled Principal Paydown shall be an event
of default which, if not cured within 30 days,
shall entitle the holders of Note A to
foreclose upon and sell the Miscellaneous
Collateral with the net proceeds of such sale
being credited by the holders of Note A or B,
as applicable (i) first, to payment of any
accrued and unpaid interest on the A Note, (ii)
second, to all outstanding but unpaid Scheduled
Principal Paydown payments, (iii) third, to
future payments of Scheduled Principal Paydown,
(iv) fourth, to the outstanding principal
balance of Note A, (v) fifth, to accrued and
unpaid interest on the Note B, (vi) sixth, to
the holders of Note B to reduce the then
outstanding principal balance of Note B and
(vii) seventh, after all amounts owed by CMI to
the holders of Notes A and B have been fully
paid, to CMI.
The following defaults shall entitle the
holders of the Note A and Note B, as
applicable, to exercise the remedies described
in the immediately preceding paragraph and take
any other actions available to the holder of a
full recourse obligation (except remedies
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<PAGE>
specifically excluded in this Term Sheet or the
Loan Documents) (A) failure to pay interest on
the Note A and Note B within 30 days of the
date, as required herein and in those notes,
(B) any default and expiration of applicable
cure periods under the debt obligations of CMI
to Merrill/GACC provided MLMCI/GACC have taken
or are taking action to enforce default
remedies or have improved any rights granted to
them under the Plan or their loan documents
with the consent of CMI, (C) failure to remedy
a breach of a Covenant (as defined herein)
within 60 days, and (D) other defaults
reasonably agreed to by CMI, the Equity
Committee, and the Unsecured Committee.
COVENANTS: The Note A and Note B loan documents will
contain covenants substantially in the form
attached as Schedule II.
MISCELLANEOUS: If the holders of Note A do not receive all or
any portion of a Scheduled Principal Paydown in
any year and the Miscellaneous Collateral has
not been sold, the holders of Note A shall
receive additional interest of 200 basis points
on any unpaid amortization amount until such
time as the amount is paid.
CMI will not pay any cash dividends or redeem
preferred stock on or prior to the Effective
Date and, until the holders of Note A and Note
B are paid in full, the Company will not be
permitted to redeem preferred stock or pay
dividends other than (i) to pay $4.1 million
annually in preferred dividends and (ii) to pay
cash dividends in an amount not to exceed 13%
per annum to a new equity investor pursuant to
the terms of this Term Sheet and the MLMCI/GACC
Term Sheet (provided, however, CMI shall be
permitted to use the net proceeds of any new
equity investment above $10 million for any
purpose except paying dividends in excess of
those permitted by this Term Sheet or
redemption of preferred stock other than
redemption of preferred stock as part of an
exchange for new preferred stock). CMI will not
use dividend(s) or distributions received from
CMSLP to pay dividends on CMI stock or for the
redemption of preferred stock. In the Event of
a Default under the Note A or Note B that
remains uncured during any applicable cure
periods, cash dividends will be suspended on
CMI stock unless dividends must be paid on the
Series F and Series [G] PIK preferred stock to
maintain CMI's REIT status.
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Any declared default under the MLMCI/GACC debt
which remains uncured after the expiration of
any applicable cure period and as to which
MLMCI/GACC have taken or are taking action to
enforce default remedies or as a consequence of
which MLMCI/GACC have improved any rights
granted to them under the Plan or their loan
documents with the consent of CMI shall
constitute a default under Note A and Note B.
Any change in ownership such that 51 percent of
the common stock of CMI is or becomes held by
any one entity, individual or related group of
entities or individuals shall require the
consent of the holders of 51 percent of the
outstanding Note A and Note B debt, voting for
these purposes as a single class.
Any amendments to the Debtors' Plan that
materially affect the treatment or recovery of
the unsecured creditors require the consent of
the Unsecured Committee; provided, however,
that the parties agree that any change in the
amount of payments, timing of payments, term of
New Debt, Collateral, liens, rights, or default
remedies available to the holders of Note A and
Note B or other specific provisions in the Term
Sheet shall be deemed material.
If CMI needs to pay a deficiency dividend, CMI
will have the option to satisfy any required
deficiency dividend payment with a PIK or cash,
provided that cash shall be paid only to the
extent that CMI reasonably determines that cash
payments are necessary to preserve its REIT
status. If CMI chooses to satisfy the
deficiency dividend in whole or in part in
cash, the holders of Note A and/or Note B shall
have a right to convert the principal amount of
such note, in whole or in part, to an equal
amount of par value of voting preferred stock.
Such preferred stock would be senior to all
other preferred stock and would have a dividend
yield equal to the interest rate on the note
converted. Such preferred stock would be the
recipient of all cash distributions (including
redemption distributions) to be made in order
to preserve CMI's REIT status. The preferred
stock would have sufficient voting power (which
would not decline as redemptions occur) to
cause redemptions of such preferred stock to be
treated as dividends for federal income tax
purposes. If cash distributions and/or PIK
distributions were not sufficient to preserve
REIT status, CMI would use such other mechanism
or mechanisms that CMI and the holders of Note
A and
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<PAGE>
Note B may agree upon at the time in order to
attempt to preserve REIT status.
The holders of Note A shall receive a negative
pledge of all assets acquired by CMI after the
Effective Date. No liens or security interests
may be granted on any such assets other than
purchase money security interests.
If plan projections for real estate losses are
exceeded (the applicable threshold may be the
same as the "Loss Threshold" referenced in the
MLMCI/GACC Term Sheet, if that threshold is
agreed to by MLMCI, GACC, CMI, the Unsecured
Committee and the Equity Committee), then CMI
may not use its cash to purchase B pieces or
for any other expense except (a) payment of
debt under the Plan, (b) payment of dividends
legally required to preserve CMI's REIT status,
and (c) ordinary course operating expenses
until the default is cured.
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<PAGE>
CRIIMI MAE Inc.
By: /s/
--------------------------
Cynthia Azzara
Senior Vice President
Official Committee of Unsecured Creditors
of CRIIMI MAE Inc.
By: /s/
--------------------------
Paul Meiring
Chairman
Official Committee of Equity Security
Holders of CRIIMI MAE Inc.
By: /s/
--------------------------
Michael St. Patrick Baxter
Dennis Auerbach
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566
Washington, DC 20044
Attorney for the Official Committee
of Equity Security Holders of
CRIIMI MAE Inc.
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<PAGE>
COLLATERAL SCHEDULE
The Series A Notes and Series B Notes will be secured by the following to the
extent provided in the Term Sheet:
I. MISCELLANEOUS COLLATERAL
The Miscellaneous Collateral, as defined in the Term Sheet, and the
liens on such collateral, shall be as follows:
A. INSURED MORTGAGE COLLATERAL. A valid and perfected first priority
collateral assignment of all right, title and interest of CMI, through its
three wholly-owned subsidiaries referenced below, in and to the Insured
Mortgage Proceeds which consist of the CMO-I Excess Payments, CMO-II Excess
Payments and CMO-III Excess Payments (in each case as defined below) and, as
to CMO-I only, together with a valid and perfected first priority pledge of
the certificate(s) representing the Interest Strip, as defined in the related
Participation Agreement.
"CMO-I EXCESS PAYMENTS" means (a) payments of excess interest and
prepayment penalties, including, without limitation, all Excess
Amounts, as defined in the related Participation Agreement and (b)
distributions of any of the assets constituting the Trust Estate,
including, without limitation, any Whole Loan PCs, Non-Interest
Strip PCs (in each case, pledged to the trust and remaining after
discharge of the trust or release of the pledge thereon) and any
proceeds therefrom (remaining after discharge of the trust or
release of the pledge thereon) that, with respect to each of the
foregoing payments and distributions, CMI receives directly or from
CRIIMI MAE Financial Corp., a wholly-owned subsidiary, by virtue of
and attributable to the FHA insured mortgage loans and GNMA
mortgage-backed securities that are pledged, as of the date of the
Plan, by CRIIMI MAE Financial Corp. to secure CRIIMI MAE Financial
Corporation's 7% Collateralized Mortgage Obligations.
"CMO-II EXCESS PAYMENTS" means (a) payments of excess interest and
prepayment penalties, including, without limitation, payments of
any Funding Surplus, as defined in the Funding Note Purchase and
Security Agreement, and payments of any excess funds from the
Collection Account on any Prepayment Date, and (b) distributions on
account of the Collateral, including, without limitation, the
Pledged Securities, pledged to Freddie Mac (in each case, remaining
after discharge of such pledge) and any proceeds therefrom
(remaining after discharge of such pledge) that, with respect to
each of the foregoing payments and distributions, CMI receives
directly or from CRIIMI MAE Financial Corporation II, a wholly-owned
subsidiary, by virtue of and attributable to the
SCHEDULE I
<PAGE>
Freddie Mac Giant GNMA-backed securities that are pledged, as of
the date of the Plan, by CRIIMI MAE Financial Corporation II, to
secure Freddie Mac's Structured Pass-Through Securities
(Guaranteed), Series C007.
"CMO-III EXCESS PAYMENTS" means (a) payments of excess interest and
prepayment penalties, including, without limitation, payments of
any Funding Surplus and Excess Funds, as defined in the Funding
Note Issuance and Security Agreement, and payments of any excess
funds from the Collection Account on any Prepayment Date, and (b)
distributions on account of the Collateral, including, without
limitation, the Pledged Securities, pledged to Fannie Mae (in each
case, remaining after discharge of such pledge) and any proceeds
therefrom (remaining after discharge of such pledge) that, with
respect to each of the foregoing payments and distributions, CMI
receives directly or from CRIIMI MAE Financial Corporation III, a
wholly-owned subsidiary, by virtue of and attributable to certain
GNMA mortgage-backed securities that are pledged, as of the date of
the Plan, by CRIIMI MAE Financial Corporation III, to secure Fannie
Mae's Guaranteed Grantor Trust Pass-Through Certificates issued by
Fannie Mae Grantor Trust 1995-T5.
B. AIM FUND COLLATERAL. a valid and perfected first priority
collateral assignment of all right, title and interest of CMI, through
CRIIMI, Inc. and any affiliates of CRIIMI, Inc. receiving any Aim Fund
Proceeds, and of CMI and CMM, through CRI-Aim Investment L.P., in and to the
Aim Fund Proceeds (as defined below), together with a valid and perfected
first priority pledge of CMI's and CMM's partnership interests in CRI-Aim
Investment L.P. and, if permitted under the Aim Acquisition L.P. Partnership
Agreement, CRI-Aim Investment L.P.'s partnership interest in Aim
Acquisition L.P.
"AIM FUND PROCEEDS" means all proceeds (including, without
limitation, payments, distributions, fees, compensation,
reimbursements and the like) received by CMI from CRIIMI, Inc., a
wholly-owned subsidiary of CMI, or affiliates of CRIIMI, Inc.
receiving any Aim Fund Proceeds, by virtue of and attributable to
the partnership interests held by CRIIMI, Inc. in the four publicly
traded AIM Fund Partnerships, (i) American Insured Mortgage
Investors Partnership, (ii) American Insured Mortgage Investors -
Series 85, L.P., (iii) American Insured Mortgage Investors L.P. -
Series 86, and (iv) American Insurance Mortgage Investors L.P. -
Series 88, and all proceeds received by CMI and CMM from CRI-AIM
Investment L.P. by virtue of or attributable to their ownership
interests in CRI-AIM Investment L.P., which holds a partnership
interest in AIM Acquisition, L.P., the advisor to the Aim Fund
Partnerships.
2
<PAGE>
C. MEZZANINE NOTES. A valid and perfected first priority assignment of
all right, title and interest of CMI and CM Mallers Building, Inc.,
respectively, in and to the Mezzanine Notes (as defined below) and a valid
and perfected first priority collateral assignment of the partnership
interests and related collateral (including any guarantees) securing such
Mezzanine Notes.
"MEZZANINE NOTES" means those six notes identified below
evidencing six loans secured by certain partnership interests
made to various borrowers by CMI and CM Mallers Building, Inc.
<TABLE>
<CAPTION>
<S> <C>
1. Lender- CRIIMI MAE Inc.
Borrower- Jemal's CM Limited Partnership
Original Principal Amount- $2,260,000.00
Date- June 29, 1998
2. Lender- CRIIMI MAE Inc.
Borrower- MBSCO Limited Partnership
Original Principal Amount- $500,000.00
Date- September 16, 1998
3. Lender- CRIIMI MAE Inc.
Borrower- MDR Shoppes Limited Partnership
Original Principal Amount- $955,000.00
Date- April 6, 1988
4. Lender- CM Mallers Building, Inc.
Borrower- The Jewelry Center Limited Partnership
Original Principal Amount- $2,070,000.00
Date- February 20, 1998
5. Lender- CRIIMI MAE Inc.
Borrower- Mission Falls Corporation
Original Principal Amount- $600,000.00
Date- September 14, 1998
6. Lender- CRIIMI MAE Inc.
Borrower- MDR Plaza Limited Partnership
Original Principal Amount- $700,000.00
Date- September 29, 1997
</TABLE>
D. BRICK CHURCH PROPERTY. A valid and perfected first priority
collateral assignment of any (a) net cash flow (after debt service and
operating expenses) attributable to the Brick Church Property (defined below)
and (b) net proceeds from the sale or other disposition of the Brick Church
Property received, in each case, by CMI, through CRIIMI MAE Brick Church, Inc.
3
<PAGE>
"BRICK CHURCH PROPERTY" means the Holiday Inn Express hotel located
in Nashville, Tennessee owned by CMI's wholly-owned subsidiary CRIIMI
MAE Brick Church, Inc.
II. CBO-I BONDS AND NOMURA BOND
The lien on the CBO-1 Bonds and the Nomura bond shall be as set forth
below, and pursuant to and consistent with an intercreditor agreement,
participation agreement, collateral trust or similar arrangement (for all
purposes of this Term Sheet, referred to as an "Intercreditor Arrangement")
which effectuates the specific terms and conditions set forth on the Term
Sheet and which is acceptable to CMI, Merrill/GACC and the Unsecured
Committee and as more specifically set forth in and subject to the terms of
the Plan.
A. CBO-1 BONDS. Subject to the terms of an Intercreditor Arrangement
as referenced above, a valid and perfected first priority lien on the CBO-1
Bonds (as defined below) securing the payment to holders of Series A Notes or
Series B Notes, as appropriate, of any net proceeds received by CMI, through
CRIIMI MAE QRS 1, Inc., upon any sale of the CBO-1 Bonds, subject to II.C.
and II.D. below.
"CBO-1 BONDS" means the following bonds and owner trust
certificates owned by the Company; CMM 1996-C1, Classes F, P, R
and XS.
Subject to change in connection with the affiliate reorganization
referenced in II.D. below, the Series A Notes or Series B Notes, as
appropriate, shall also be secured by (a) a valid and perfected first
priority pledge by CMI of the capital stock in CRIIMI MAE QRS-1, Inc.;
provided, however, that such stock pledge may not be realized on in any
manner that would cause CRIIMI MAE QRS-1, Inc. to cease to be a qualified REIT
subsidiary, and (b) a valid and perfected first priority security interest in
proceeds received by CMI through CRIIMI MAE QRS-1, Inc. attributable to the
CBO-1 Bonds; provided however that such stock pledge and security interest in
proceeds shall be subject to (y) all rights of Merrill and GACC, as set forth
in the term sheet among CMI, Merrill and GACC, and (z) the terms and
conditions of an Intercreditor Arrangement among CMI, Merrill, GACC and the
Unsecured Committee, relating to, among other matters, the CBO-1 Bonds and
proceeds attributable thereto.
B. NOMURA BOND. Subject to the terms of an Intercreditor Arrangement
as referenced above, a valid and perfected first priority lien on the Nomura
Bond securing the payment to holders of Series A Notes or Series B Notes, as
appropriate, of any net proceeds received by CMI upon the sale of the Nomura
Bond, subject to II.C. below.
C. TERMINATION OF INTERCREDITOR ARRANGEMENT. If and when (a)
Merrill/GACC have been repaid their debt in full or such debt is otherwise
satisfied (provided, however, the Intercreditor Arrangements referenced above
shall continue if the Merrill/GACC debt is refinanced until the refinance
lender's debt is fully satisfied), or (b) Merrill/GACC sells, takes for its
own account or otherwise disposes of the CBO-2 Bonds and are not
4
<PAGE>
acting to sell the CBO-1 Bonds and Nomura Bond, then the Intercreditor
Arrangements referenced above shall terminate and the liens on the CBO-1
Bonds and Nomura Bond shall become valid and perfected first priority liens
on the CBO-1 Bonds and the Nomura Bond securing the indebtedness evidenced by
the Series A Notes or Series B Notes, as appropriate, subject to and in
accordance with the terms of the Term Sheet and the Plan, and further,
subject to II.D. below.
D. AFFILIATE REORGANIZATION. The first priority lien on the CBO-1
Bonds referenced in both II.A and II.C. above shall be structured so as to be
direct or, if necessary in connection with an affiliate reorganization
referenced in the Plan, indirect (with such indirect structure to be
reasonably acceptable to the Unsecured Committee), which affiliate
reorganization shall be reasonably acceptable to CMI, Merrill/GACC and the
Unsecured Committee.
III. CBO-2 BONDS
The lien on the CBO-2 Bonds shall be as set forth below and as more
specifically set forth in the Term Sheet and the Plan, and shall be subject
to terms and conditions acceptable to CMI, Merrill/GACC and the Unsecured
Committee, which terms and conditions shall include those to be set forth in
an Intercreditor Arrangement acceptable to such parties, such that (i) the
liens shall constitute "direct or indirect soft second liens" and (ii) in the
event that the Merrill and GACC claims are documented as repurchase
agreements pursuant to the Plan, the holders of Series A Notes or Series B
Notes, as appropriate, shall receive the full difference between the value of
the CBO-2 Bonds (as determined by a third party valuation) and the
outstanding amount of the debt owed by CMI to Merrill/GACC under the Plan.
CBO-2 BONDS. A valid and perfected soft second priority lien on
the CBO-2 Bonds (as defined below), which lien shall be structured so as
to be direct or, if necessary in connection with an affiliate
reorganization referenced in the Plan, indirect (with such structure to
be reasonably acceptable to the Unsecured Committee), which affiliate
reorganization shall be reasonably acceptable to CMI, Merrill/GACC and
the Unsecured Committee.
"CBO-2 BONDS" means the bonds and owner trust certificates owned
by the Company referenced on Schedule A hereto.
Subject to change in connection with the affiliate reorganization
referenced above, the Series A Notes or Series B Notes, as appropriate, shall
also be secured by (a) to the extent permitted by Citicorp, a valid and
perfected first priority pledge by CMI of the capital stock in CRIIMI MAE
CMBS Corp.; provided, however, that such stock pledge may not be realized on
in any manner that would cause CRIIMI MAE CMBS Corp. to cease to be a qualified
REIT subsidiary, and (b) a valid and perfected security interest in proceeds
received by CMI through CRIIMI MAE CMBS Corp. attributable to the CBO-2
Bonds; provided however that such stock pledge and security interest in
proceeds shall be subject to (x) all rights of Merrill and GACC, as set forth
in the term sheet among CMI, Merrill and GACC, (y) the terms and conditions
of an Intercreditor
5
<PAGE>
Arrangement, among CMI, Merrill, GACC and the Unsecured Committee, relating
to, among other matters, the CBO-2 Bonds and proceeds attributable thereto,
and (z) the terms and conditions of any Intercreditor Arrangement among CMI,
Citicorp and the Unsecured Committee.
IV. CMO-IV BONDS AND CMO-IV ADDITIONAL COLLATERAL
CMO-IV BONDS. If permitted by Citicorp, a valid and perfected soft
second priority lien on the CMO-IV bonds and the CMO-IV Additional Collateral
(in each case as defined below), which lien shall be structured so as to be
direct or, if necessary in connection with an affiliate reorganization
referenced in the Plan, indirect (with such structure to be reasonably
acceptable to the Unsecured Committee), which affiliate reorganization shall
be reasonably acceptable to CMI, Merrill/GACC and the Unsecured Committee.
1. "CMO-IV BONDS" means the following bonds owned by the Company:
CMM 1998-1, Classes X/IO, F, G, H and J.
2. "CMO-IV ADDITIONAL COLLATERAL" means the following bonds and
owner trust certificates owned by the Company: CMM 1998-1, Classes K,
P, XS and R.
Subject to change in connection with the affiliate reorganization
referenced above, the Series A Notes or Series B Notes, as appropriate, shall
also be secured by, to the extent permitted by Citicorp, (a) a valid and
perfected first priority pledge by CMI of the capital stock in CRIIMI MAE CMBS
Corp.; provided, however, that such stock pledge may not be realized on in
any manner that would cause CRIIMI MAE CMBS Corp. to cease to be a qualified
REIT subsidiary, and (b) a valid and perfected security interest in proceeds
received by CMI through CRIIMI MAE CMBS Corp. attributable to the CMO-IV
Bonds and CMO-IV Additional Collateral; provided however, that such stock
pledge and security interest in proceeds shall be subject to the terms and
conditions of any Intercreditor Arrangement among CMI, Citicorp and the
Unsecured Committee, relating to, among other matters, the CMO-IV Bonds,
CMO-IV Additional Collateral and proceeds attributable to both.
CMI and the Unsecured Committee acknowledge that, with respect to the
Miscellaneous Collateral described in I. above, all cash proceeds and
distributions attributable to such Miscellaneous Collateral are intended to
be made available to the Unsecured Committee (provided, however, that as
acknowledged and agreed to by the Unsecured Committee, the sub advisor fee
paid to CMSLP in connection with the Aim fund Partnerships shall not be made
available to the Unsecured Committee) and agree to take all reasonable action,
including the execution of all reasonable documents, to effect such intent.
In order to effectuate the rights and entitlement of the Unsecured
Committee to cash proceeds, payments and/or distributions, as set forth
herein, CMI and CMM shall agree and covenant, subject, in each case, to any
restrictions or constraints imposed under
6
<PAGE>
applicable law, applicable constituent documents and/or applicable operative
documents, to take such actions as are necessary to insure that all such
proceeds, payments and/or distributions received by entities other than CMI
and CMM are promptly paid to CMI or CMM, as applicable.
The foregoing collateral descriptions will be modified if it is
determined that a better lien can be granted consistent with the Term Sheet,
Plan and any and all applicable constituent and operative documents, after
review of such constituent and operative documents by the Unsecured Committee.
References herein to the Unsecured Committee shall include any successor
thereto.
7
<PAGE>
SCHEDULE A
CBO-2
<TABLE>
<CAPTION>
Transaction Tranches Rating Face Amount
<S> <C> <C> <C>
CMM 1998-C1 D1 BB+ 159,500,000
CMM 1998-C1 D2 BB+ 159,501,000
CMM 1998-C1 E BB 70,889,000
CMM 1998-C1 F BB- 35,444,000
CMM 1998-C1 G B+ 88,612,000
CMM 1998-C1 H1 B 88,611,000
CMM 1998-C1 H2 B 88,611,000
CMM 1998-C1 J B- 106,334,000
CMM 1998-C1 IE CCC 70,889,000
CMM 1998-C1 IE NR 230,389,951
------------
1,098,780,951
</TABLE>
8
<PAGE>
SUMMARY OF COVENANTS FOR SERIES A AND SERIES B NOTES
<TABLE>
<S> <C>
Minimum Excess Cash Flow The Minimum Excess Cash Flow covenant will be
calculated as follows:
Gross Cash Flows (as defined), less cash
flow from Miscellaneous Collateral, if
any, will equal Adjusted Gross Cash Flows.
Adjusted Gross Cash Flows will be reduced
by (i) all general operating and
administrative expenses form CMI and its
affiliates (excluding CMSLP), (ii) cash
interest expense, and (iii) allowed cash
dividends to shareholders (Adjusted Gross
Cash Flows, less items (i) through (iii),
will be defined as the "Excess Cash Flow").
Excess Cash Flow must be greater than or
equal to the principal amortization
payable to MLMCI/GACC based on a 15-year
mortgage amortization schedule:
PERIOD MINIMUM EXCESS CASH FLOW (1)
------ ----------------------------
3 months ended [ ] [insert 15-year amortization
6 months ended [ ] schedule per period]
9 months ended [ ]
12 months ended [ ]
12 months ended [ ]
12 months ended [ ]
12 months ended [ ]
12 months ended [ ]
Gross Cash Flow shall include (i) cash payments
received and accruals on securities held as long
as payment on such accruals are not delinquent by
more than 45 days from scheduled receipt and
(ii) all other cash income. Gross Cash Flows
will not include cash distributions, if any,
from CMSLP. (Cash flows and cash expenses
related to Match Funded Debt will be excluded
from this calculation).
(1)-Amounts will be inserted based upon
one-month LIBOR as of the Effective Date (and
the related spread over LIBOR) and based upon
such LIBOR rate remaining constant throughout
the term of Note A and B, assuming a 15-year
mortgage amortization schedule per period. The
Minimum Excess Cash Flow will be calculated for
the first three, six, nine and twelve month
periods on a cumulative basis beginning with the
first full fiscal quarter after the Effective
Date. Subsequently, all Minimum Excess Cash Flow
covenant tests will be calculated each fiscal
quarter and will include the trailing
twelve-month period.
Dividends Dividends will be limited to:
- Preferred Stock cash dividends not to exceed
$4.1 million per year
- Preferred dividends in connection with an equity
investment before or after the Effective Date as
long as: (i) the cash dividend rate does not
exceed 13% per year, (ii) the Company has
sufficient liquidity on a projected basis to
make interest and mandatory amortization
payments during the upcoming 12-month period,
and (iii) the Company is in compliance with
other covenants.
Asset Sales Proceeds from the sale of assets, after
repayment of debt having a lien on such assets,
will be used only to: (i) reinvest in
income-producing assets (including securities
trading assets) within a 180-day reinvestment
period or (ii) repay, on a pro rata basis: (1)
Merrill/GAAC, (2) the Series A and B Notes and
(3) Citibank's debt, if any, related to CMO IV.
</TABLE>
SCHEDULE II
<PAGE>
Transactions with Any transaction with an affiliate must be on an
Affiliates arms-length basis. To the extent that the proposed
transaction exceeds $2.0 million, a board resolution
(excluding the respective affiliate, if applicable) is
required. To the extent that the proposed transaction
exceeds $25 million, the opinion of a nationally
recognized investment bank, professional services firm, or
similar expert is required.
Purchase of The Company will not be permitted to purchase CMBS Assets
Assets upon a rated "B" or lower if any event of default occurs
Default (including a cross-default to other debt).
Limitation on Debt The Company and its subsidiaries will not be permitted to
incur additional debt other than: (i) Refinancing Debt,
(ii) Non-Recourse Repo Debt, (iii) senior bank debt not
to exceed $25.0 million, (iv) capital lease obligations
not to exceed $400,000 and (v) debt permitted under the
Interest Coverage Ratio provision below.
REFINANCING DEBT includes: (1) the extension of existing
debt or (2) debt incurred solely to refinance existing debt
as long as such new debt incurred: (i) has an average
weighted life no shorter than the debt being refinanced,
(ii) has lower annual principal amortization requirements
(prior to the maturity of the Series A and Series B
Notes) than the debt being refinanced and (iii) has cash
interest expense that is not materially greater than the
debt being refinanced.
NON-RECOURSE REPO DEBT includes debt under repurchase
obligations or similar types of financings, regardless of
title, as long as: (i) the Company is in compliance with
all other terms and covenants and (ii) the only recourse
of the lender in the repo debt in the event of a default is
the underlying collateral/securities purchased with such
debt.
The Company cannot incur debt that is senior to the
Series A and Series B Notes.
Interest Coverage In addition to the debt described in clauses (i-iv)
Ratio above, the Company and its subsidiaries may incur
additional debt if, pro forma for incurring such debt,
the Company's Interest Coverage Ratio for the trailing
twelve-month period (or for such shorter time period if
fewer than twelve months have expired post Effective
Date) is greater than 1.5X.
The Company cannot issue debt pursuant to the Interest
Coverage Ratio that: (i) matures prior to the maturity of
the Series B Notes or (ii) is callable prior to the
maturity of the Series A and B Notes. The preceding
sentence will not apply to non-amortizing purchase money
repo debt (recourse) used to acquire CMBS Assets and
having a maturity of less than 2 years.
Interest Coverage Ratio shall be calculated as: (1)(i)
Gross Cash Flow, less (ii) cash flow from the
Miscellaneous Collateral, if any, less (iii) G&A and
other cash operating expenses divided by (2) cash
interest expense excluding cash loan extension fees.
Default; Exercise 60-day notice and cure for all covenants. A waiver of
of Remedies default for any of the above covenants or acceleration or
exercise of any remedies will require a vote of a
majority in principal amount of the holders of the A and
B Notes voting as a single class.
<PAGE>
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 14TH day of July, 2000, copies
of the Praecipe Filing Amended Exhibit 2 to the Debtors' Third Amended Joint
Plan of Reorganization were sent via first-class mail, postage prepaid (except
as otherwise indicated), to the persons on the attached service list.
/S/
--------------------
Richard L. Wasserman
