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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): April 10, 2000
(February 22, 2000)
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CRIIMI MAE INC.
(Exact name of registrant as specified in its charter)
Maryland 1-10360 52-1622022
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
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11200 Rockville Pike
Rockville, Maryland 20852
(Address of principal executive offices, including zip code, of Registrant)
(301) 816-2300
(Registrant's telephone number, including area code)
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Item 5. Other Events
Attached as exhibits to this Current Report on Form 8-K are (1) a
Preferred Stock Exchange Agreement between CRIIMI MAE Inc. and Mees Pierson
Investments Inc. on February 22, 2000; (2) an Articles of Amendment to Articles
Supplementary to the Articles of Incorporation in Respect of Series E
Cumulative Convertible Preferred Stock on February 22, 2000; and (3) a press
release issued by the Company announcing the exchange of the Company's Series
C Preferred Stock for a new Series of Preferred Stock.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
The following exhibits are filed as a part of this Current Report on Form 8-K:
(c) Exhibit
99.1 Preferred Stock Exchange Agreement between CRIIMI MAE Inc. and Mees
Pierson Investments Inc. on February 22, 2000.
99.2 Articles of Amendment to Articles Supplementary to the Articles of
Incorporation in Respect of Series E Cumulative Convertible Preferred
Stock on February 22, 2000.
99.3 Press Release issued by CRIIMI MAE Inc. on February 24, 2000.
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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 hereunto duly authorized.
CRIIMI MAE Inc.
Dated: April 10, 2000 /s/ William B. Dockser
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William B. Dockser
Chairman of the Board
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EXHIBIT INDEX
Exhibit
No. Description
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*99.1 Preferred Stock Exchange Agreement between CRIIMI MAE Inc. and Mees
Pierson Investments Inc. on February 22, 2000.
*99.2 Articles of Amendment to Articles Supplementary to the Articles of
Incorporation in Respect of Series E Cumulative Convertible Preferred
Stock on February 22, 2000.
*99.3 Press Release issued by CRIIMI MAE Inc. on February 24, 2000.
*Filed herewith.
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PREFERRED STOCK EXCHANGE AGREEMENT
This Preferred Stock Exchange Agreement (this "Agreement") is entered into
as of the 22nd day of February, 2000, by and between CRIIMI MAE Inc., a Maryland
corporation (the "Company") and MeesPierson Investments Inc. ("MeesPierson").
RECITALS
WHEREAS, MeesPierson beneficially owns 103,000 shares of the Company's
Series C Cumulative Convertible Preferred Stock, par value $0.01 per share (the
"Series C Preferred Stock");
WHEREAS, the Company has authorized the issuance of up to 203,000 shares of
a new class of preferred stock designated as "Series E Cumulative Convertible
Preferred Stock," par value $0.01 per share (the "Series E Preferred Stock");
WHEREAS, the terms and conditions of the Series E Preferred Stock are as
set forth in the Articles Supplementary to the Articles of Incorporation of the
Series E Preferred Stock (the "Series E Articles Supplementary"), a copy of
which is attached hereto as Exhibit A, and incorporated herein by reference,
which terms and conditions are intended by agreement to be amended and
supplemented on the Effective Date (as defined in the Series E Articles
Supplementary) substantially in accordance with the term sheet attached hereto
as Exhibit B, which term sheet has been agreed to by the parties hereto; and
WHEREAS, principally for the purpose of effecting certain amendments to the
Articles Supplementary to the Articles of Incorporation for the Series C
Preferred Stock MeesPierson desires to exchange each share of its Series C
Preferred Stock for one share of Series E Preferred Stock and the Company
desires to issue the Series E Preferred Stock in exchange for such Series C
Preferred Stock.
NOW, THEREFORE, in consideration of the mutual covenants and subject to the
conditions herein set forth, the parties agree as follows:
1. Exchange.
(a) Exchange. On February 22, 2000 (the "Exchange Date"), a certificate
representing 103,000 shares of Series E Preferred Stock shall be delivered to
MeesPierson upon receipt of certificates representing 103,000 shares of Series C
Preferred Stock duly endorsed by MeesPierson for transfer to the Company for
cancellation.
(b) Cancellation of the Series C Preferred Stock. Upon issuance and
delivery of 103,000 shares of Series E Preferred Stock by the Company to
MeesPierson, the Series C Preferred Stock shall be cancelled for all purposes.
2. Accrued and Unpaid Dividends. Accrued and unpaid dividends on the shares
of the Series C Preferred Stock through the Exchange Date shall continue to
exist as accrued and unpaid dividends under the Articles Supplementary to the
Articles of Incorporation for the Series C Preferred Stock, respectively, and as
such, the claim of MeesPierson for accrued and unpaid dividends shall continue
to be of the same extent, priority and validity as before the Exchange Date.
3. Treatment of Series E Preferred Stock under Plan of Reorganization. Any
and all plans of reorganization filed by the Company shall provide for treatment
of Series E Preferred Stock substantially in accordance with the term sheet
attached hereto as Exhibit B, unless the holder of the Series E Preferred Stock
consents to different treatment.
4. Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws of the State of Maryland, except where federal
bankruptcy law applies. Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the United States Bankruptcy Court for the
District of Maryland, Greenbelt Division, with respect to any suit, action,
proceeding or judgment relating to or arising out of this Agreement.
5. Consent. MeesPierson, as the sole holder of the Company's Series D
Cumulative Convertible Preferred Stock, par value $0.01 per share (the "Series D
Preferred Stock"), consents to the issuance of the Series E Preferred Stock,
which Series E Preferred Stock shall rank, as to dividend rights and rights upon
liquidation, dissolution or winding up, on a parity with the Series D Preferred
Stock.
6. 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.
[The next page is the signature page]
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IN WITNESS WHEREOF, the undersigned through each of their respective duly
authorized officers have executed this Preferred Stock Exchange Agreement
effective as of the date first set forth above.
CRIIMI MAE INC.
By:
Name:
Title:
MEESPIERSON INVESTMENTS INC.
By:
Name:
Title:
By:
Name:
Title:
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Exhibit A
ARTICLES SUPPLEMENTARY
TO THE
ARTICLES OF INCORPORATION
OF
CRIIMI MAE INC.
CRIIMI MAE INC., a Maryland corporation (the "Corporation"), by and through
its undersigned Senior Vice President, does hereby certify that:
A. On February 18, 2000, the Board of Directors of the Corporation (the
"Board of Directors"), pursuant to Section 2-105 of the Maryland General
Corporation Law (the "MGCL") and Article SIXTH of the Articles of Incorporation
of the Corporation duly classified 203,000 unissued shares of the Corporation's
preferred stock, $0.01 par value per share ("Preferred Stock"), into a class of
preferred stock designated "Series E Cumulative Convertible Preferred Stock,"
(the "Series E Preferred Stock") and established and fixed the preferences,
conversion or other rights, voting powers, restrictions or terms or conditions
of redemption of such shares of stock, and authorized the execution and delivery
of these Articles Supplementary to the Maryland State Department of Assessments
and Taxation for filing pursuant to Section 2-208 of the MGCL.
B. The Series E Preferred Stock shall be subject to all of the provisions
of the Corporation's Articles of Incorporation relating to the capital stock of
the Corporation generally and shall, as set by the Board of Directors, have the
following preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption:
1. Definitions. For the purposes of these Articles Supplementary, the
following terms shall have the meanings indicated:
"Applicable Rate" shall mean (a) for the period commencing on the date of
issuance of the Series E Preferred Stock and ending on the Effective Date, for
each Quarterly Dividend Period the sum of (i) 75 basis points plus (ii) LIBOR as
of the second LIBOR Market Day preceding the commencement of such Quarterly
Dividend Period, and (b) for the period commencing on the Effective Date, such
rate as shall be provided in the Corporation's plan of reorganization as in
effect on the Effective Date, and these Articles Supplementary shall be deemed
so amended and supplemented to so provide.
"Articles of Incorporation" means the Articles of Incorporation of the
Corporation, as amended and supplemented.
"Average Closing Trade Price" shall mean the quotient of (a) the sum of the
Closing Trade Prices for all of the Valid Trading Days during the applicable
Conversion Pricing Period divided by (b) the number of Valid Trading Days in
such Conversion Pricing Period.
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"Business Day" shall mean any day other than a Saturday, Sunday or the
Friday after Thanksgiving or a day on which banking institutions in the State of
New York or Maryland are authorized or obligated by law or executive order to
close.
"Closing Trade Price" for a given Trading Day shall mean (a) the last
traded price for the Common Stock or the Survivor Common Stock, as the case may
be, for such Trading Day as reported by the New York Stock Exchange or the
American Stock Exchange or any successor thereto or (b) the last reported bid
quotation for the Common Stock or the Survivor Common Stock, as the case may be,
for such Trading Day as quoted by the NASDAQ National Market System or any
successor thereto.
"Common Stock" shall mean the common stock, par value $.01 per share, of
the Corporation.
"Conversion Pricing Period" shall mean a period of twenty-one (or such
fewer number as shall be mutually agreed upon in writing by the Corporation and
the holder of the Series E Preferred Stock being converted) consecutive Trading
Days immediately preceding the date of delivery of a Holder Conversion Notice or
the Mandatory Conversion Date, as the case may be.
"Dividend Parity Stock" shall have the meaning ascribed thereto in Section
3(b) hereof.
"Effective Date" shall mean the first day, other than a Saturday, Sunday,
or a "legal holiday" (as defined in Rule 9005(a) of the Federal Rules of
Bankruptcy Procedure), that is not less than eleven (11) days after the date on
which the clerk of the U.S. Bankruptcy Court for the District of Maryland,
Greenbelt Division, or such other court that exercises jurisdiction over the
Corporation's bankruptcy case, enters the Order confirming the Corporation's
plan of reorganization as such may be amended, modified or supplemented from
time to time, and on which day, as determined by the Corporation (i) all
conditions to the Effective Date as set forth in the Corporation's plan of
reorganization have been satisfied or waived by the Corporation, and (ii) no
stay of the Order confirming the Corporation's plan of reorganization is in
effect.
"Event" shall have the meaning ascribed thereto in Section 4(b) hereof.
"Holder Conversion Notice" shall have the meaning ascribed thereto in
Section 9(d) hereof.
"LIBOR" shall mean the arithmetic mean of the offered rates for 3 month
deposits in United States dollars which appear on the display designated as
"Page 3750" on the Telerate Service (or such other page as may replace Page 3750
on that service for the purpose of displaying London interbank offered rates of
major banks) (the "Telerate Screen Page 3750") as of 11:00 A.M., London time, on
the specified LIBOR Market Day; provided, however, if at the specified time on
the specified LIBOR Market Day fewer than two such offered rates so appear on
the Telerate Screen Page 3750, LIBOR shall mean the arithmetic mean of three
offered rates to prime banks for 3 month deposits in United States dollars by
three major banks in the London interbank market, as selected by the
Corporation, at approximately 11:00 A.M., London time, on the specified LIBOR
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Market Day; provided, further, if fewer than three major banks in the London
interbank market are quoting rates to prime banks for 3 month deposits in United
States dollars, LIBOR shall be the LIBOR in effect for the previous Quarterly
Dividend Period.
"LIBOR Market Day" shall mean any day on which commercial banks are open
for business (including dealings in foreign exchange and foreign currency
deposits) in London, England.
"Liquidation Value" with respect to a share of Series E Preferred Stock
shall mean $100.
"Mandatory Conversion Date" shall have the meaning ascribed thereto in the
Corporation's plan of reorganization as in effect on the Effective Date, and
these Articles Supplementary shall be deemed so amended and supplemented to so
provide.
"Minimum Daily Price" shall mean either (a) 75% of the Closing Trade Price
for the Trading Day immediately preceding either the date of delivery of the
Holder Conversion Notice to the Corporation or the Mandatory Conversion Date, as
the case may be, or (b) such price as shall be mutually agreed in writing by the
Corporation and the holder of the Series E Preferred Stock that has requested
conversion thereof.
"Person" shall mean any individual, firm, corporation, or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"Qualified Person" shall mean any Person that, immediately after giving
effect to the applicable Transaction, (i) is a solvent corporation or other
entity organized under the laws of any State of the United States of America
having its common stock or, in the case of an entity other than a corporation,
equivalent equity securities, listed on the New York Stock Exchange or the
American Stock Exchange or quoted by the NASDAQ National Market System or any
successor thereto, and such common stock or equivalent equity security continues
to meet the requirements for such listing or quotation and (ii) is required to
file, and in each of the three fiscal years immediately preceding the
consummation of the applicable Transaction (or, if shorter, since its inception)
has filed, reports with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the United States Securities Exchange Act of 1934, as
amended.
"Quarterly Dividend Payment Date" shall have the meaning ascribed thereto
in Section 3(a) hereof.
"Quarterly Dividend Period" shall mean with respect to any Quarterly
Dividend Payment Date, the period commencing on the day succeeding the prior
Quarterly Dividend Payment Date (or, with respect to the first Quarterly
Dividend Payment Date for a share of Series E Preferred Stock, the date of
issuance of such share of Series E Preferred Stock) to and including such
Quarterly Dividend Payment Date.
"Redemption Price" shall have the meaning ascribed thereto in Section 6(a)
hereof.
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"Series B Preferred Stock" shall mean the Corporation's Series B Cumulative
Convertible Preferred Stock.
"Series C Preferred Stock" shall mean the Corporation's Series C Cumulative
Convertible Preferred Stock.
"Series D Preferred Stock" shall mean the Corporation's Series D Cumulative
Convertible Preferred Stock.
"Series F Preferred Stock" shall mean the Corporation's Series F Redeemable
Cumulative Dividend Preferred Stock (convertible during the period of ten (10)
business days after the fifth business day after the initial issue date and
during the period of ten (10) business days ending ninety (90) calendar days
after the initial issue date or the first business day thereafter).
"Subsidiary" of any Person means any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.
"Surviving Person" shall mean the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or substantially all of the properties and assets of the
Corporation, or the Person consolidating with or merging into the Corporation in
a merger, consolidation or other corporate combination in which the Corporation
is the continuing or surviving Person, but in connection with which the Series E
Preferred Stock or Common Stock of the Corporation is exchanged, converted or
reinstated into the securities of any other Person or cash or any other
property; provided, however, if such Surviving Person is a direct or indirect
Subsidiary of a Qualified Person, the parent entity that is a Qualified Person
shall be the Surviving Person.
"Survivor Common Stock" with respect to any Person shall mean any shares of
such Person of any class or series which has no preference or priority in the
payment of dividends or in the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person and which is
not subject to redemption by such Person; provided, however, that if at any time
there shall be more than one such class or series, the shares of each such class
and series issuable upon conversion of the Series E Preferred Stock then being
converted shall be substantially in the proportion to the total number of shares
of each such class and series.
"Trading Day" shall mean any day on which the principal national securities
exchange on which the Common Stock or Survivor Common Stock, as the case may be,
is listed or admitted to trading is open for the transaction of business or, if
the Common Stock or Survivor Common Stock, as the case may be, is not listed or
admitted to trading on any national securities exchange, a Business Day.
"Transaction" shall have the meaning ascribed thereto in Section 9(b)
hereof.
"Transfer Agent" shall have the meaning ascribed thereto in Section 9(d)
hereof.
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"Valid Trading Day" shall mean any Trading Day during a Conversion Pricing
Period in which either (a) the Closing Trade Price for such Trading Day exceeds
the Minimum Daily Price or (b) the Closing Trade Price for such Trading Day does
not exceed the Minimum Daily Price and the Corporation and the holder of the
Series E Preferred Stock that has requested conversion thereof agree in writing
to include such day as a Valid Trading Day in such Conversion Pricing Period.
2. Designation and Number, Rank. (a) The shares of such series of preferred
stock shall be designated as "Series E Cumulative Convertible Preferred Stock"
(the "Series E Preferred Stock"). The number of shares initially constituting
the Series E Preferred Stock shall be 203,000 which number may be decreased (but
not increased) by the Board of Directors without a vote of the holders of Series
E Preferred Stock; provided, however, that such number may not be decreased
below the number of then outstanding shares of Series E Preferred Stock.
(b) The Series E Preferred Stock shall, with respect to dividend rights and
rights upon liquidation, dissolution or winding up, rank (i) senior to the
common stock, par value $.01 per share of the Corporation (the "Common Stock"),
the Series F Preferred Stock and to all other capital stock of the Corporation
the terms of which specifically provide that such capital stock ranks junior to
the Series E Preferred Stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of the Corporation, (ii) on a parity with
the Series D Preferred Stock and to all other capital stock of the Corporation
the terms of which specifically provide that such capital stock ranks on a
parity with the Series E Preferred Stock with respect to dividend rights or
rights upon liquidation, dissolution or winding up of the Corporation and (iii)
junior to the Corporation's Series B Preferred Stock and all other capital stock
of the Corporation the terms of which specifically provide that such capital
stock ranks senior to the Series E Preferred Stock with respect to dividend
rights or rights upon liquidation, dissolution or winding up of the Corporation.
3. Dividends and Distribution. (a) The holders of shares of Series E
Preferred Stock, in preference to the holders of shares of Common Stock, Series
F Preferred Stock and of any other shares of capital stock of the Corporation
ranking junior to the Series E Preferred Stock as to payment of dividends, shall
be entitled to receive, when, as and if declared by the Board of Directors, out
of the assets of the Corporation legally available therefor, cumulative
dividends at the Applicable Rate, payable in quarterly installments on the last
Business Day of each calendar quarter (March 31, June 30, September 30, December
31) in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"). Each such quarterly dividend shall be fully cumulative,
to the extent not paid, and, with respect to each share of Series E Preferred
Stock, shall accrue (whether or not earned or declared) on a daily basis with
additional cumulative dividends on any accrued but unpaid dividends accruing
daily (whether or not earned or declared) and compounding quarterly at the
Applicable Rate, from the date of issuance of such share of Series E Preferred
Stock, and thereafter from the first day of the quarterly period in which such
dividend may be payable as herein provided. Quarterly dividends payable with
respect to calendar quarters and any partial quarter in the period commenced on
the date of issuance of the Series E Preferred Stock and ending with the
Effective Date shall be payable in Common Stock. No quarterly dividends payable
prior to the Effective Date shall be paid until the Effective Date. After the
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Effective Date, quarterly dividends shall be payable as provided in the
Corporation's plan of reorganization as in effect on the Effective Date, and
these Articles Supplementary shall be deemed so amended and supplemented to so
provide.
(b) With respect to dividends payable in Common Stock, pursuant to Section
3(a) above, the calculation of the number of shares of Common Stock issuable by
the Corporation shall be based on (i) the cash amount which would be payable if
cash dividends were to be paid on the Quarterly Dividend Payment Date divided by
(ii) the average of the Closing Trade Prices for the five (5) Trading Days prior
to the Quarterly Dividend Payment Date. No fractional shares shall be issued.
(c) Dividends paid on the shares of the Series E Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated among all such shares of Series E
Preferred Stock and all other shares of capital stock of the Corporation ranking
on a parity as to dividends with the Series E Preferred Stock "Dividend Parity
Stock") at the time outstanding pro rata so that the amount of dividends
declared per share of Series E Preferred Stock and the Dividend Parity Stock
shall in all cases bear to each other the same ratio that accrued dividends per
share on the Series E Preferred Stock and the Dividend Parity Stock bear to each
other. The Board of Directors may fix a record date for the determination of
holders of shares of the Series E Preferred Stock entitled to receive payment of
a dividend declared thereon, which record date shall be no more than sixty days
nor less than ten days prior to the date fixed for the payment thereof.
(d) Any dividend payment made on shares of the Series E Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to shares of the Series E Preferred Stock which remains payable.
(e) The holders of shares of the Series E Preferred Stock shall not be
entitled to receive any dividends or other distributions except as expressly
provided herein.
4. Voting Rights. So long as the Series E Preferred Stock remains
outstanding, the holders of shares of the Series E Preferred Stock shall have
the following voting rights:
(a) The holders of shares of Series E Preferred Stock shall have no voting
rights except as set forth below or as otherwise from time to time required by
law.
(b) The affirmative vote or consent of the holders of at least two-thirds
of the outstanding shares of Series E Preferred Stock, voting separately as a
class, in person or by proxy, in writing or at a special or annual meeting of
stockholders called for the purpose, shall be necessary to, (i) authorize,
create or increase the authorized or issued amount of any class or series of the
Corporation's capital stock ranking prior to the Series E Preferred Stock with
respect to payment of dividends or distribution of assets upon liquidation,
dissolution or winding up or reclassify any authorized capital stock of the
Corporation into any such capital stock, or create, authorize or issue any
obligation or security convertible into or evidencing the right to purchase any
such capital stock or (ii) amend, alter or repeal any of the provisions of the
Articles of Incorporation or the Articles Supplementary to the Articles of
Incorporation for the Series E Preferred Stock, whether by merger, consolidation
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or otherwise (an "Event"), so as to materially and adversely affect any right,
preference, privilege or voting power of the Series E Preferred Stock or the
holders thereof; provided, however, with respect to any amendment, alteration,
waiver or repeal of any provision of these Articles Supplementary to the
Articles of Incorporation for the Series E Preferred Stock no consent, approval
or vote of the holders of Common Stock or any other capital stock of the
Corporation shall be necessary or required; and provided, further with respect
to the occurrence of any of the Events set forth in (ii) above, so long as the
Series E Preferred Stock remains outstanding with the terms thereof materially
unchanged, taking into account that upon the occurrence of an Event, the
Corporation may not be the surviving entity, the occurrence of any such Event
shall not be deemed to materially and adversely affect such rights, preferences,
privileges or voting power of holders of the Series E Preferred Stock; and
provided, further, that (x) any increase in the amount of authorized Common
Stock or Series E Preferred Stock or the authorization, creation or issuance of
any other class or series of capital stock or (y) any increase in the amount of
authorized shares of any other class or series of capital stock, in each case
ranking on a parity with or junior to the Series E Preferred Stock with respect
to the payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
(c) During any period in which dividends on the Series E Preferred Stock
are cumulatively in arrears for six or more quarterly dividend payments (whether
or not consecutive), then the number of directors constituting the Board of
Directors shall, without further action, be increased by two and the holders of
shares of the Series E Preferred Stock, voting separately as a single class
(together with any other series of Preferred Stock as provided in Section
4(d)(iii)), shall have, in addition to the other voting rights expressly set
forth herein, the right to elect the directors of the Corporation to fill such
newly created directorships, the remaining directors to be elected by the other
classes of stock entitled to vote therefor at each meeting of stockholders held
for the purpose of electing such remaining directors. Such additional voting
rights shall continue until such time as all dividends accumulated on the Series
E Preferred Stock shall have been paid in full, at which time such additional
directors shall cease to be directors, subject to the rights of any other series
of Preferred Stock to vote for the election of such additional directors (as
described in Section 4(d)(iii)), and such additional voting right of the holders
of Series E Preferred Stock shall terminate, subject to revesting in the event
of each and every subsequent event of the character indicated above. In no event
shall the holders of Series E Preferred Stock voting separately as a class be
entitled to elect a total of more than two directors to the Board of Directors
pursuant to this Section 4.
(d)(i) The foregoing rights of holders of shares of Series E Preferred
Stock to take any actions as provided in this Section 4 may be exercised at any
annual meeting of stockholders or at a special meeting of stockholders held for
such purpose as hereinafter provided or at any adjournment thereof, or by the
written consent, delivered to the Secretary of the Corporation, of all of the
holders of the Series E Preferred Stock. So long as such right to vote continues
(and unless such right has been exercised by written consent of all of the
holders of the Series E Preferred Stock), the Chairman of the Board of Directors
may call, and upon the written request of holders of record of twenty (20)% of
the outstanding shares of Series E Preferred Stock addressed to the Secretary of
the Corporation at the principal office of the Corporation, shall call, a
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special meeting of the holders of shares entitled to vote as provided herein.
Such meeting shall be held within sixty (60) days after delivery of such request
to the Secretary, at the place and upon the notice provided by law and in the
by-laws of the Corporation for the holding of meetings of stockholders.
(ii) Except as provided in paragraph (d)(iii) of this Section 4, at each
meeting of stockholders at which the holders of shares of Series E Preferred
Stock shall have the right, voting separately as a single class, to elect
directors of the Corporation as provided in this Section 4 or to take any
action, the presence in person or by proxy of the holders of record of a
majority of the total number of shares of Series E Preferred Stock then
outstanding and entitled to vote on the matter shall be necessary and sufficient
to constitute a quorum. At any such meeting or at any adjournment thereof:
(A) the absence of a quorum of the holders of shares of Series E Preferred
Stock shall not prevent the election of directors other than those to be elected
by the holders of shares of Series E Preferred Stock and the absence of a quorum
of the holders of shares of any other class or series of capital stock shall not
prevent the election of directors to be elected by the holders of shares of
Series E Preferred Stock or the taking of any action as provided in this Section
4; and
(B) in the absence of a quorum of the holders of shares of Series E
Preferred Stock, a majority of the holders of such shares present in person or
by proxy shall have the power to adjourn the meeting as to the actions to be
taken by the holders of shares of Series E Preferred Stock from time to time and
place to place without notice other than announcement at the meeting until a
quorum shall be present.
(iii) If, at any time when the holders of Series E Preferred Stock are
entitled to elect directors pursuant to the provisions of Section 4(c), the
holders of any one or more other series of Preferred Stock are entitled to elect
directors by reason of any default or event specified in the Corporation's
Articles of Incorporation (or any articles supplementary thereto), as in effect
at the time, or the articles supplementary for such series, and if the terms for
such other additional series so permit, then the voting rights of the two or
more series then entitled to vote shall be combined (with each series having a
number of votes proportional to the aggregate liquidation preference of its
outstanding shares). In such case, the holders of Series E Preferred Stock and
of all such other series then entitled so to vote, voting together as one class,
shall elect such directors. At each meeting of stockholders at which the holders
of shares of Series E Preferred Stock shall have the right, voting together with
such other series as a single class, to elect directors of the Corporation as
provided in this Section 4 or to take any action, the presence in person or by
proxy of the holders of record of a majority of the total number of shares of
such two or more series then outstanding and entitled to vote on the matter
shall be necessary and sufficient to constitute a quorum. At any such meeting or
at any adjournment thereof:
(A) the absence of a quorum of the holders of shares of such two or more
series shall not prevent the election of directors other than those to be
elected by the holders of shares of such two or more series and the absence of a
quorum of the holders of shares of any other class or series of capital stock
shall not prevent the election of directors to be elected by the holders of
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shares of such two or more series or the taking of any action as provided in
this Section 4; and
(B) in the absence of a quorum of the holders of shares of such two or more
series a majority of the holders of such shares present in person or by proxy
shall have the power to adjourn the meeting as to the actions to be taken by the
holders of shares of such two or more series from time to time and place to
place without notice other than announcement at the meeting until a quorum shall
be present.
If the holders of any such other series have elected such directors prior
to the happening of the default or event permitting the holders of Series E
Preferred Stock to elect directors, or prior to a written request for the
holding of a special meeting being received by the Secretary of the Corporation
as elsewhere required in Section 4(d) above, then a new election shall be held
with all such other series of Preferred Stock and the Series E Preferred Stock
voting together as a single class for such directors, resulting in the election
of such new directors. If the holders of any such other series are entitled to
elect in excess of two directors, the Series E Preferred Stock shall not
participate in the election of more than such directors, and those directors
whose terms first expire shall be deemed to be the directors elected by the
holders of Series E Preferred Stock; provided that, if at the expiration of such
terms, the holders of Series E Preferred Stock are entitled to vote in the
election of directors pursuant to the provisions of this Section 4, then the
Secretary of the Corporation shall call a meeting (which meeting may be the
annual meeting or special meeting of stockholders) of holders of Series E
Preferred Stock for the purpose of electing replacement directors (in accordance
with the provisions of this Section 4) to be held on or prior to the time of
expiration of the expiring terms referred to above.
(iv) Except as otherwise specifically provided in paragraph (d)(iii) of
this Section 4:
(A) for the taking of any action as provided in paragraphs (b) and (c) of
this Section 4 by the holders of Series E Preferred Stock, each such holder
shall have one vote for each share of such stock standing in such holder's name
on the transfer books of the Corporation as of any record date fixed for such
purpose or, if no such date be fixed, at the close of business on the Business
Day next preceding the day on which notice is given, or if notice is waived, at
the close of business on the Business Day next preceding the day on which the
meeting is held; and
(B) each director elected by the holders of shares of Series E Preferred
Stock as provided in this Section 4 shall, unless his or her term shall expire
earlier upon payment in full by the Corporation of all accumulated dividends on
the Series E Preferred Stock, hold office until the annual meeting of
stockholders next succeeding his election and until his successor, if any, is
elected and qualified.
(v) In case any vacancy shall occur among the directors elected by the
holders of shares of Series E Preferred Stock (and any other series of Preferred
Stock, if any) as provided in this Section 4, such vacancy may be filled for the
unexpired portion of the term by vote of the remaining director theretofore
elected by such holders (if there is a remaining director), or such director's
successor in office. If any such vacancy is not so filled within 20 days after
<PAGE>16
the creation thereof or if both directors so elected by the holders of Series E
Preferred Stock (and any other series of Preferred Stock, if any, as provided in
Section 4(d)(iii)) shall cease to serve as directors before their terms shall
expire, the holders of the Series E Preferred Stock (and any other series of
Preferred Stock, if any, as provided in Section 4(d)(iii)) then outstanding and
entitled to vote for such directors may, by written consent as herein provided,
or at a special meeting of such holders called as provided herein, elect
successors to hold office for the unexpired terms of such directors whose places
shall be vacant.
(vi) Any director elected by the holders of shares of Series E Preferred
Stock voting separately as a single class (together with any other series of
Preferred Stock, if any, as provided in Section 4(d)(iii)) may be removed from
office with or without cause by the vote of the holders of at least a majority
of the outstanding shares of Series E Preferred Stock or written consent of all
of the holders of the outstanding shares of Series E Preferred Stock (together
with any other series of Preferred Stock, if any, as provided in Section
4(d)(iii)). A special meeting of the holders of shares of Series E Preferred
Stock (together with holders of any other series of Preferred Stock, if any, as
provided in Section 4(d)(iii) may be called in accordance with procedures set
forth in subparagraph (d)(i) of this Section 4.
5. Certain Restrictions. (a) If shares of Series E Preferred Stock are
outstanding unless, full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series E Preferred Stock for past dividend periods
and the then current dividend period, other than pursuant to Section 3(c), the
Corporation will not declare, make, pay or set apart for payment or distribution
any dividends or other distributions (other than in Common Stock or other
capital shares ranking junior to the Series E Preferred Stock as to dividends
and upon liquidation, dissolution or winding up) on the Common Stock, Series F
Preferred Stock or any other series or class of capital stock ranking as to
dividends, on a parity with or junior to the Series E Preferred Stock for any
period.
(b) If shares of Series E Preferred Stock are outstanding, unless full
cumulative dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for such payment
on the Series E Preferred Stock for all past dividend periods and the then
current dividend period, the Corporation shall not redeem, purchase or otherwise
acquire for any consideration (or pay or make available money for a sinking fund
for the redemption of) any Common Stock, Series F Preferred Stock or any other
series or class of capital stock ranking, as to dividends or upon liquidation,
dissolution or winding up, on a parity with or junior to the Series E Preferred
Stock (except by conversion into or exchange for Common Stock or other capital
stock of the Corporation ranking junior to the Series E Preferred Stock as to
dividends and upon liquidation, dissolution or winding up); provided, however,
the foregoing shall not prevent the purchase or acquisition of any shares of
capital stock of the Corporation by the Corporation (i) in order to preserve the
status of the Corporation as a real estate investment trust ("REIT") or (ii)
pursuant to a purchase or exchange offer made on comparable terms to all holders
of outstanding shares of capital stock of the Corporation.
<PAGE>17
(c) The Corporation shall not permit any Subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of capital stock of
the Corporation unless the Corporation could, pursuant to paragraph (b) of this
Section 5, purchase or otherwise acquire such shares at such time and in such
manner.
6. Redemption. (a) The Series E Preferred Stock shall be redeemable in
whole or in part, at the option of the Company, at any time and from time to
time after the date of issuance of the Series E Preferred Stock, to the extent
the Corporation shall have funds legally available therefore, in cash, at $106
per share (the "Redemption Price"), together in each case with an amount equal
to accrued and unpaid dividends to (and including) the date fixed for
redemption. On and after the date fixed for redemption, provided that the
Redemption Price (including any accrued and unpaid dividends to (and including)
the date fixed for redemption) has been duly paid or deposited in trust for the
benefit of the holders of the Series E Preferred Stock, dividends shall cease to
accrue on the Series E Preferred Stock called for redemption, such shares shall
no longer be deemed to be outstanding and all rights of the holders of such
shares as stockholders of the Corporation shall cease, except the right to
receive the moneys payable upon such redemption, without interest thereon, upon
surrender of the certificates evidencing such shares. Any moneys deposited in
trust by the Corporation, which shall not be required for redemption because of
the exercise of any right of conversion by the holders of the Series E Preferred
Stock, shall be repaid to the Corporation forthwith. Any moneys deposited in
trust by the Corporation and unclaimed at the end of two years from the date
fixed for such redemption shall be repaid to the Corporation upon its written
request, after which repayment the holders of the shares of Series E Preferred
Stock so called for redemption shall look only to the Corporation for the
payment thereof.
(b) Notice of any redemption pursuant to Section 6(a) shall be given to the
holders of shares of Series E Preferred Stock once not less than forty-five (45)
or more than sixty (60) days prior to the date fixed for redemption. Notice of
redemption shall be given by first class mail to each such holder's address as
shown on the stock books of the Corporation and will specify (i) the date fixed
for redemption, (ii) the number of shares of Series E Preferred Stock to be
redeemed, (iii) the Redemption Price, (iv) the place or places where
certificates for shares of Series E Preferred Stock are to be surrendered for
payment of the Redemption Price, (v) that dividends on the shares of Series E
Preferred Stock to be redeemed will cease to accrue on the dated fixed for
redemption, (vi) the date upon which the holders' conversion rights will
terminate (which date shall be determined in accordance with Section 9(g)). If
less than all shares of Series E Preferred Stock then outstanding are to be
redeemed, the shares of Series E Preferred Stock will be redeemed pro rata from
among the holders of shares of Series E Preferred Stock then outstanding.
7. Reacquired Shares. Any shares of Series E Preferred Stock converted,
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares of Series E Preferred Stock shall upon their cancellation, and
upon the filing of an appropriate certificate with the Maryland State Department
of Assessments and Taxation, become authorized but unissued shares of Preferred
Stock and may be reissued as part of another series of Preferred Stock subject
<PAGE>18
to the conditions or restrictions on issuance set forth herein, to the extent
any Series E Preferred Stock remains outstanding.
8. Liquidation, Dissolution or Winding Up. (a) Upon any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation then, before any distribution or payment shall be made to the
holders of any shares of Common Stock or any other class or series of capital
stock of the Corporation ranking junior to the Series E Preferred Stock in the
distribution of assets upon any liquidation, dissolution or winding up of the
Corporation, the holders of Series E Preferred Stock shall be entitled to
receive out of assets of the Corporation legally available for distribution to
stockholders, liquidating distributions in the amount of the Liquidation Value
per share, plus an amount equal to all dividends accrued and unpaid thereon as
of the date of liquidation dissolution or winding up. After payment of the full
amount of the liquidating distributions to which they are entitled, the holders
of Series E Preferred Stock will have no right or claim to any of the remaining
assets of the Corporation. In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of the
Corporation are insufficient to pay the amount of the liquidation distributions
on all outstanding shares of Series E Preferred Stock and the corresponding
amounts payable on all shares of other classes or series of capital stock of the
Corporation ranking on a parity with the Series E Preferred Stock in the
distribution of assets upon liquidation, dissolution or winding up, then the
holders of the Series E Preferred Stock and all other such classes or series of
capital stock shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
(b) Neither the consolidation, merger or other business combination of the
Corporation with or into any other Person, nor the sale, lease or conveyance of
all or substantially all of the property or business of the Corporation shall be
deemed to constitute a liquidation, dissolution or winding up of the Corporation
for purposes of this Section 8.
9. Conversion. (a)(i) Shares of Series E Preferred Stock shall become
convertible at the option of the holder thereof into fully paid and
non-assessable shares of Common Stock beginning after the Effective Date in
accordance with the terms and conditions to be provided in the Corporation's
plan of reorganization as in effect on the Effective Date, and these Articles
Supplementary shall be deemed so amended and supplemented to so provide.
Notwithstanding the preceding, if the Effective Date has not occurred by
December 31, 2000, then the shares of Series E Preferred Stock shall become
convertible at the option of the holder thereof into fully paid and
non-assessable shares of Common Stock in increments of 5,000 shares of Series E
Preferred Stock per calendar month commencing with January 2001.
(ii) Notwithstanding anything in this Section 9(a) to the contrary, the
holders of the Series E Preferred Stock shall not be permitted to convert (i)
more than 5,000 shares (or less than 1,000 shares at any one time) of Series E
Preferred Stock during any calendar month or (ii) any shares of Series E
Preferred Stock into shares of Common Stock if such conversion would result in
the holder of Series E Preferred Stock requesting such conversion owning 5% or
more of the Corporation's then outstanding Common Stock.
<PAGE>19
Determination of which holders shall be entitled to convert during any
applicable period shall be based upon the holders which first deliver to the
Corporation the conversion notice and certificates of Series E Preferred Stock
specified in paragraph (d) below, with any allocation between holders delivering
the required conversion notice and certificates of Series E Preferred Stock on
the same day to be made pro rata based upon the number of shares of Series E
Preferred Stock submitted for conversion.
In the event a holder of Series E Preferred Stock cannot effect a requested
conversion of such holder's Series E Preferred Stock at the time requested, the
Corporation shall, without further action on the part of such holder, convert
such shares of Series E Preferred Stock into Common Stock on the earliest date
that such conversion is possible under the terms of these Articles
Supplementary.
(b) On the Mandatory Conversion Date for each share of Series E Preferred
Stock, such share of Series E Preferred Stock shall be automatically converted
into fully paid and nonassessable shares of Common Stock.
(c) The number of shares of Common Stock deliverable upon conversion of a
share of Series E Preferred Stock shall be equal to a fraction (i) the numerator
of which is the Liquidation Value of the Series E Preferred Stock and (ii) the
denominator of which is a Closing Trade Price for a Trading Day occurring within
the Conversion Pricing Period mutually acceptable to the Corporation and the
holder, provided, however, that if no Closing Trade Price is mutually acceptable
to the Corporation and the holder, then the denominator shall be the Average
Closing Trade Price for the applicable Conversion Pricing Period.
(d) Prior to the Mandatory Conversion Date, the holders of Series E
Preferred Stock may convert such Series E Preferred Stock into Common Stock by
surrendering to the Corporation at the principal office of the Corporation in
the State of Maryland (the "Transfer Agent"), or at the office of any agent or
agents of the Corporation, as may be designated by the Board of Directors, the
certificate of such Series E Preferred Stock to be converted accompanied by a
written notice stating that such holder elects to convert all or a specified
whole number of such shares in accordance with the provisions of this Section 9
and specifying the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued (a "Holder Conversion
Notice"). In case a Holder Conversion Notice shall specify a name or names other
than that of such holder, such Holder Conversion Notice shall be accompanied by
payment of all transfer taxes, if any, payable upon the issuance of shares of
Common Stock in such name or names. Other than such taxes, the Corporation will
pay any and all issue and other taxes (other than taxes based on income) that
may be payable in respect of any issue or delivery of shares of Common Stock on
conversion of Series E Preferred Stock pursuant hereto.
(e) After the Mandatory Conversion Date, the holders of Series E Preferred
Stock may exchange certificates representing Series E Preferred Stock for
certificates representing Common Stock by surrendering to the Transfer Agent
such certificates representing Series E Preferred Stock. In case the holder of
Series E Preferred Stock requests the Common Stock to be registered in a name or
names other than that of such holder, the Series E Preferred Stock submitted for
conversion shall be accompanied by payment of all transfer taxes, if any,
<PAGE>20
payable upon the issuance of shares of Common Stock in such name or names. Other
than such taxes, the Corporation will pay any and all issue and other taxes
(other than taxes based on income) that may be payable in respect of any issue
or delivery of shares of Common Stock on conversion of Series E Preferred Stock
pursuant hereto.
(f) As promptly as practicable, and in any event within five Business Days
after the date of delivery of the shares of Series E Preferred Stock to be
converted (and, if prior to the Mandatory Conversion Date, the Holder Conversion
Notice), the Corporation shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable full
shares of Common Stock to which the holder of shares of Series E Preferred Stock
being converted shall be entitled and (ii) if less than the full number of
shares of Series E Preferred Stock evidenced by the surrendered certificate or
certificates is being converted, a new certificate or certificates, of like
tenor, for the number of shares of Series E Preferred Stock evidenced by such
surrendered certificate or certificates less the number of shares being
converted. All conversions shall be deemed to have been made at the close of
business on the date of delivery of the Holder Conversion Notice or the
Mandatory Conversion Date, as the case may be, so that the rights of the holder
thereof as to the shares being converted shall cease except for the right to
receive shares of Common Stock in accordance herewith, and the Person entitled
to receive the shares of Common Stock shall be treated for all purposes as
having become the record holder of such shares of Common Stock at such time. The
Corporation shall not be required to convert, and no surrender of shares of
Series E Preferred Stock shall be effective for that purpose, while the transfer
books of the Corporation for the Common Stock are closed for any purpose (but
not for any period in excess of 10 calendar days); but the surrender of shares
of Series E Preferred Stock for conversion during any period while such books
are so closed shall become effective for conversion immediately upon the
reopening of such books, as if the conversion had been made on the date such
shares of Series E Preferred Stock were surrendered, and at a rate of conversion
which assumes the Conversion Pricing Period took place during the period
immediately prior to the closing of such books.
(g) In case any shares of Series E Preferred Stock are to be redeemed
pursuant to Section 6, the right of conversion set forth in this Section 9 shall
cease and terminate as to the shares of Series E Preferred Stock to be redeemed
at the close of business, Washington, D.C. time, on the date of delivery to the
holders of Series E Preferred Stock of notice of redemption in accordance with
Section 6(b), unless (i) the Corporation shall have received a Holder Conversion
Notice in respect of such shares of Series E Preferred Stock prior to such time
or (ii) the Corporation shall default in the payment of the amount payable upon
such redemption.
(h) Upon conversion of any shares of the Series E Preferred Stock, all
accrued and unpaid dividends up to (and including) the date of receipt by the
Corporation of the Holder Conversion Notice or the Mandatory Conversion Date, as
the case may be, whether or not declared, on each share of Series E Preferred
Stock being converted shall become immediately due and payable on the date of
the issuance and delivery by the Corporation of the certificate representing the
shares of Common Stock to which such holder of shares of the Series E Preferred
Stock being converted is entitled. In the event that the Corporation is legally
prohibited from paying such dividends on such date, the Corporation shall pay
such unpaid dividends to the holder of such shares as soon thereafter as it is
legally able to do so.
<PAGE>21
(i) In connection with the conversion of any shares of Series E Preferred
Stock, no fractions of shares of Common Stock shall be issued, but in lieu
thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Average Closing Trade Price for the applicable Conversion Pricing Period. If
more than one share of Series E Preferred Stock shall be surrendered for
conversion by the same holder at the same time, the number of full shares of
Common Stock issuable on conversion thereof shall be computed on the basis of
the total number of shares of Series E Preferred Stock so surrendered.
(j) The Corporation shall at all times reserve and keep available for
issuance upon the conversion of the Series E Preferred Stock, such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the conversion of all outstanding shares of Series E
Preferred Stock, and shall take all action required to increase the authorized
number of shares of Common Stock if necessary to permit the conversion of all
outstanding shares of Series E Preferred Stock.
(k) In case of any capital reorganization or reclassification of
outstanding shares of Common Stock, or in the case of any consolidation or
merger of the Corporation with or into another Person or in the case of any sale
or conveyance to another Person of the property of the Corporation as an
entirety or substantially as an entirety (each of the foregoing being referred
to as a "Transaction"), at the option of the holder of any shares of Series E
Preferred Stock, (i) each share of Series E Preferred Stock then outstanding
shall thereafter be convertible into, in lieu of the Common Stock issuable upon
such conversion prior to consummation of such Transaction, the kind and amount
of shares of stock and other securities and property receivable (including cash)
upon the consummation of such Transaction by a holder of that number of shares
of Common Stock into which one share of Series E Preferred Stock was
convertible, assuming that the Conversion Pricing Period related thereto ended
on the day immediately preceding the consummation of such Transaction
(including, on a pro rata basis, the case, securities or property received by
holders of Common Stock in any tender or exchange offer that is a step in such
Transaction, insofar as receipt of such cash, securities or property in
connection with any step in such Transaction does not result in the holders of
Series E Preferred Stock receiving the aggregate more than such holders would
otherwise be entitled to receive pursuant to this clause (i)) or (ii) each share
of Series E Preferred Stock shall entitle the holder thereof to receive, upon
presentation of the certificate therefor to the Surviving Person subsequent to
the consummation of such Transaction (A) if the Surviving Person is a Qualified
Person, that number of shares of Survivor Common Stock of the Surviving Person
determined by multiplying the number of shares of Common Stock into which such
share of Series E Preferred Stock was convertible, assuming that the Conversion
Pricing Period related thereto ended on the day immediately preceding the
consummation of such Transaction by a fraction, the numerator of which is the
Average Closing Trade Price for the Common Stock for twenty-one Trading Days
preceding the date of consummation of such Transaction and the denominator of
which is the Average Closing Trade Price for the Survivor Common Stock for the
twenty-one Trading Days preceding the consummation of the transaction giving
rise to the adjustment in this paragraph (k) or (B) if the Surviving Person is
not a Qualified Person, $106 in cash per share of Series E Preferred Stock,
payable in immediately available funds. In any such case, if necessary,
<PAGE>22
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions set forth in this Section 9 with respect to
the rights and interests thereafter of the holders of shares of Series E
Preferred Stock to the end that the provisions set forth herein for the
protection of the conversion rights of the Series E Preferred Stock shall
thereafter be applicable, as nearly as reasonably may be, to any such other
shares of stock and other securities and property deliverable upon conversion of
the shares of Series E Preferred Stock remaining outstanding (with such
adjustments in the conversion price and number of shares issuable upon
conversion and such other adjustments in the provisions hereof as the Board of
Directors shall determine to be appropriate). In case securities or property
other than Common Stock shall be issuable or deliverable upon conversion as
aforesaid, then all references to this Section 9 shall be deemed to apply, so
far as appropriate and as nearly as may be, to such other securities or
property.
10. REIT Status. Nothing contained in these Articles Supplementary or the
Articles of Incorporation shall limit the authority of the Board of Directors to
take such other action as it deems necessary or advisable to protect the
Corporation and the interests of the stockholders by preservation of the
Corporation's qualification as a REIT under the REIT Provisions (as defined in
the Articles of Incorporation), including, without limitation, the enforcement
of the provisions of Article EIGHTEENTH of the Articles of Incorporation.
11. Chapter 11 Reorganization. Notwithstanding anything to the contrary
contained in these Articles Supplementary, the Series E Preferred Stock shall be
subject to the treatment provided under any plan of reorganization, as the same
may be amended, modified or supplemented from time to time and confirmed by the
United States Bankruptcy Court for the District of Maryland, Greenbelt Division,
in the chapter 11 case of the Corporation pending in such court as case number
98-2-3115-DK.
<PAGE>23
IN WITNESS WHEREOF, this instrument has been executed for and on behalf and
in the name of the Corporation by its officers thereunto duly authorized on
February 18, 2000.
CRIIMI MAE INC.
By:
Name: David Iannarone
Title: Senior Vice President,
General Counsel
[Seal]
Attest:
___________________________________
Name: Susan Railey
Title: Assistant Secretary
<PAGE>24
THE UNDERSIGNED, Senior Vice President of the Corporation, who executed on
behalf of the Corporation Articles Supplementary of which this Certificate is
made a part, hereby acknowledges in the name and on behalf of said Corporation
the foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect to
the authorization and approval thereof are true in all material respects under
the penalties of perjury.
By:
Name: David Iannarone
Title: Senior Vice President,
General Counsel
<PAGE>25
Exhibit B
CONVERTIBLE PREFERRED STOCK TERM SHEET
Issuer: CRIIMI MAE Inc. ("CRIIMI MAE", "CMI" or "the Company")
Holder: MeesPierson Investments Inc. ("MeesPierson" or "MPII")
Issue Amount: $10.3 million (103,000 Preferred Shares (defined below))
Liquidation Value: $100 per share
Securities: Series E Floating Rate Convertible Preferred Shares,
("Preferred Shares")
Dividend:
1. From February 23, 2000 through the Effective Date of the Company's
Reorganization Plan ("the Effective Date"), cumulative, floating-rate dividends
based upon 3-month LIBOR plus 75 basis points, accruing quarterly, and payable,
on the Effective Date, in common stock, which will not require registration to
trade ("Dividend Securities").
2. After the Effective Date, cumulative, floating rate dividends based upon
3-month LIBOR plus 250 basis points, payable quarterly in cash or Dividend
Securities at CMI's option.
3. Unpaid dividends shall compound quarterly.
Dividend Share The amount of shares received as Dividend Securities will be
Amount: equal to the dividend dollar amount divided by the average of
the five (5) closing trade prices of the common stock for the
five (5) previous trading days prior to the dividend payment
date.
Conversion The Preferred Shares will become convertible into CRIIMI MAE
Feature: common stock at the option of MPII beginning three months
after the Effective Date in accordance with the following
schedule:
1. Up to 25,750 Preferred Shares may be converted beginning at the end of 3
months, 9 months, 12 months and 15 months after the Effective Date without
regard to the price of CRIIMI MAE's common stock.
<PAGE>26
2. Beginning 4 months after the Effective Date and ending 8 months after
the Effective Date, MPII may convert up to 7,500 additional Preferred Shares in
any 21 trading day period so long as the price of the common stock remained
above $3.00 per share for each of the previous 21 trading days.
3. Beginning 10 months after the Effective Date, MPII may convert up to
5,000 additional Preferred Shares in any 21 trading day period so long as the
price of the common stock remained above $3.00 per share for each of the
previous 21 trading days.
4. In no event may MPII convert (i) more than 25,750 Preferred Shares in
any 21 trading day period, or (ii) Preferred Shares resulting in MPII owning 5%
or more of CMI's then outstanding common stock.
Conversion Prior to the Effective Date. In the event that the Effective
Date does not occur on or before December 31, 2000, then 5,000 Preferred Shares
shall become convertible at the option of MPII into fully paid and
non-assessable shares of CMI common stock in January 2001 and in each month
thereafter until the Effective Date. In no event may MPII convert (i) more than
5,000 Preferred Shares (or less than 1,000 Preferred Shares at any one time)
during any calendar month or (ii) any Preferred Shares into CMI common stock if
such conversion would result in MPII owning 5% or more of CMI's then outstanding
common stock.
Conversion
Settlement: Upon conversion, MPII shall receive the common shares and
accrued and unpaid dividends on the Series E Preferred Shares
within five business days following completion of the Conversion
Pricing Period.
Conversion MPII may convert its Preferred Shares into common stock, which
Price: will not require registration to trade, at a price per share
equal to the Closing Trade Price for a Valid Trading Day within
the Conversion Pricing Period mutually acceptable to CMI and
MPII or, if no Closing Trade Price is mutually acceptable to CMI
and MPII, the Average Closing Trade Price of CMI common stock
over the applicable Conversion Pricing Period.
Closing Trade The last trade price for CMI common shares (a) as reported on
Price: the NYSE or American Stock Exchange or any successor thereto, or
(b) the last reported bid quotation for the common stock or the
survivor common stock as the case may be, as reported by the
NASDAQ National Market System or any successor thereto, for that
Trading Day.
<PAGE>27
Average Calculated by dividing (i) the sum of the closing trade prices
Closing on the NYSE for CMI common stock on each Valid Trading Day
Trade during the applicable Conversion Pricing Period, by (ii) the
Price: total number of Valid Trading Days in such Conversion Pricing
Period.
Conversion 21 trading days commencing on the first Valid Trading Day prior
Pricing to notice of conversion, subject to earlier termination as
Period: agreed upon by CMI and MPII.
Valid An Exchange Business Day during a Conversion Pricing Period in
Trading Day: which either (i) the Minimum Daily Price has been exceeded, or
(ii) the Minimum Daily Price has not been exceeded and MPII and
CMI agree to include such day as an Exchange Business Day in
such Conversion Pricing Period.
Minimum Either (i) 75% of the Closing Trade Price for the trading day
immediately
Daily Price: preceding either the date of delivery of the Holder
Conversion Notice to the Company or the Mandatory Conversion
Date, as the case may be, or (ii) an amount agreed upon by MPII
and CMI at the beginning of any Conversion Pricing Period, that
shall be applicable for every Exchange Business Day during
a Conversion Pricing Period.
Mandatory Any outstanding Preferred Shares will be converted on the second
Conversion: anniversary of the Effective Date.
Optional Upon thirty (30) days prior written notice to MPII, the
Redemption: convertible preferred will be redeemable, in whole or in part,
at anytime at CRIIMI MAE's discretion at 106% plus accrued and
unpaid dividends.
<PAGE>28
CRIIMI MAE INC.
ARTICLES OF AMENDMENT TO ARTICLES
SUPPLEMENTARY TO THE ARTICLES OF INCORPORATION IN
RESPECT OF SERIES E CUMULATIVE CONVERTIBLE PREFERRED STOCK
CRIIMI MAE Inc., a Maryland Corporation having its principal office in
Rockville, Maryland (the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland (the "SDAT") that:
FIRST: The Articles Supplementary to the Articles of Incorporation of the
Corporation classifying the Series E Cumulative Convertible Preferred Stock (the
"Series E Preferred Stock"), as filed with the SDAT on February 22, 2000 (the
"Articles Supplementary"), are hereby amended by deleting Article B.2(b)(ii) in
its entirety and inserting in lieu thereof the following:
"(ii) on a parity with the Series D Preferred Stock and to all other
capital stock of the Corporation the terms of which specifically provide that
such capital stock ranks on a parity with the Series E Preferred Stock with
respect to dividend rights or rights upon liquidation, dissolution or winding up
of the Corporation and"
SECOND: The Articles Supplementary are hereby further amended by deleting
Article B.9(a)(i) in its entirety and inserting in lieu thereof the following:
"(a)(i) Shares of Series E Preferred Stock shall become convertible at the
option of the holder thereof into fully paid and non-assessable shares of Common
Stock beginning after the Effective Date in accordance with the terms and
conditions to be provided in the Corporation's plan of reorganization as in
effect on the Effective Date, and these Articles Supplementary shall be deemed
so amended and supplemented to so provide. Notwithstanding the preceding, if the
Effective Date has not occurred by December 31, 2000, then the shares of Series
E Preferred Stock shall become convertible at the option of the holder thereof
into fully paid and non-assessable shares of Common Stock in increments of 5,000
shares of Series E Preferred Stock per calendar month commencing with January
2001."
<PAGE>29
THIRD: The Articles Supplementary are hereby further amended by deleting
the first paragraph of Article B.9(a)(ii) in its entirety and inserting in lieu
thereof the following:
"(ii) Notwithstanding anything in this Section 9(a) to the contrary, the
holders of the Series E Preferred Stock shall not be permitted to convert (i)
more than 5,000 shares (or less than 1,000 shares at any one time) of Series E
Preferred Stock during any calendar month or (ii) any shares of Series E
Preferred Stock into shares of Common Stock if such conversion would result in
the holder of Series E Preferred Stock requesting such conversion owning 5% or
more of the Corporation's then outstanding Common Stock."
FOURTH: The amendments of the Articles Supplementary as herein made were
declared advisable and approved by the board of directors of the Corporation by
board resolution dated March 15, 2000 and were approved by the sole holder
(holding all outstanding and subscribed for shares of Series E Preferred Stock
at the time of such approval) of the Series E Preferred Stock, the only class or
series of stock of the Corporation entitled to vote on the amendment, by
unanimous written consent dated effective March 16, 2000.
FIFTH: These Articles of Amendment shall become effective when the SDAT
accepts the Articles of Amendment for record.
<PAGE>30
IN WITNESS WHEREOF, CRIIMI MAE Inc. has caused these Articles of Amendment
to be signed in its name and on its behalf by its Senior Vice-President/General
Counsel and attested by its Assistant Secretary on March , 2000.
CRIIMI MAE INC.
BY:
David B. Iannarone
Senior Vice-President/ General Counsel
ATTEST:
Assistant Secretary
Susan B. Railey
THE UNDERSIGNED, Senior Vice-President/General Counsel of CRIIMI MAE Inc.,
who executed on behalf of said corporation the foregoing Articles of Amendment,
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said corporation, the foregoing Articles of Amendment to be the
corporate act of said corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
David B. Iannarone
Senior Vice-President/ General Counsel
<PAGE>31
CRIIMI MAE EXCHANGES ITS SERIES C PREFERRED STOCK
FOR A NEW SERIES OF PREFERRED STOCK
ROCKVILLE, MD, February 24, 2000 - (NYSE:CMM) - On February 22, 2000,
CRIIMI MAE Inc. ("CMI" or the "Company") and the holder of its Series C
Cumulative Convertible Preferred Stock, par value $0.01 per share (the "Series C
Preferred Stock") entered into a Preferred Stock Exchange Agreement to exchange
(the "Share Exchange") 103,000 outstanding shares of Series C Preferred Stock
for 103,000 shares of a new series of preferred stock designated as "Series E
Cumulative Convertible Preferred Stock," par value $0.01 per share (the "Series
E Preferred Stock").
The principal purpose of the Share Exchange was to extend the February 23,
2000 mandatory conversion date for the Series C Preferred Stock to a later date
that will be specified in the Company's amended plan of reorganization, which
has not yet been confirmed by the Bankruptcy Court. If the mandatory conversion
date had not been extended, the 103,000 outstanding shares of Series C Preferred
Stock would have converted into approximately 9 million additional shares of CMI
common stock, resulting in substantial dilution to existing common shareholders.
Pursuant to the Preferred Stock Exchange Agreement, the Company intends to
amend its plan of reorganization to provide for certain additional terms and
conditions with respect to the Series E Preferred Stock, substantially in
accordance with the term sheet attached as an exhibit to such Agreement. The
additional terms principally address conversion and dividend matters. The
Preferred Stock Exchange Agreement will be filed as an exhibit to a Current
Report on Form 8-K with the Securities and Exchange Commission (the "SEC").
The Company has taken the position that approval of the Share Exchange is
not required under applicable bankruptcy law. However, at the request of the
holder of the Series C Preferred Stock, the Company filed an Emergency Motion
for approval of the Share Exchange in the United States Bankruptcy Court in
Greenbelt, MD. The Official Committee of Unsecured Creditors of CMI ("Creditors'
Committee") opposed the Emergency Motion while the Official Committee of Equity
Security Holders of CMI supported the Emergency Motion. At the conclusion of the
hearing on the Emergency Motion, the Bankruptcy Court neither approved nor
disapproved the Share Exchange. The Company believes the Share Exchange is in
the best interest of the Company, its creditors, and shareholders. There can be
no assurance that the Creditors' Committee will not challenge the Share
Exchange.
<PAGE>32
On October 5, 1998, CRIIMI MAE Inc. and two affiliates filed for protection
under Chapter 11 of the U.S. Bankruptcy Code. Before filing for reorganization,
the Company had been actively involved in acquiring, originating, securitizing
and servicing multi-family and commercial mortgages and mortgage related assets
throughout the United States. Since filing for Chapter 11 protection, CMI has
suspended its loan origination, loan securitization and CMBS acquisition
businesses. The Company continues to hold a substantial portfolio of
subordinated CMBS and, through its servicing affiliate, acts as a servicer for
its own as well as third party securitizations.
For further information, shareholders and securities brokers should contact
Shareholder Services at (301) 816-2300, e-mail [email protected],
institutional investors contact Andrew Blocher at (301) 231-0371, e-mail
[email protected] and news media contact James Pastore at (202) 546-6451,
e-mail [email protected]
Note: Except for historical information, forward-looking statements
contained in this release involve a variety of risks and uncertainties. These
risks and uncertainties include the continued instability of the capital
markets, the ability of the Company to obtain reorganization financing,
including but not limited to a restructuring of certain of its debt and the sale
of selected CMBS to a party or parties for sufficient proceeds, the ability to
obtain new equity should it be determined by the Company to proceed with new
equity as part of the Company's plan of reorganization, the ability of relevant
parties to finalize and execute constituent and operative documents called for
by the Company's plan of reorganization, the ability to obtain bankruptcy court
approval of a disclosure statement, the possible confirmation of an alternative
plan, the trends in the CMBS market, competitive pressures, the effect of future
losses on the Company's need for liquidity, confirmation and effectiveness of
the Company's plan of reorganization, the effects of the bankruptcy proceeding
on the Company's ongoing business, the actions of CMI's creditors and equity
security holders, including the risk that the Share Exchange could be challenged
and found to be of no effect resulting in the issuance of a substantial number
of additional shares of the Company's common stock, the possibility that the
Company's confirmed plan of reorganization may have terms relating to the Series
E Preferred Stock which materially differ from those set forth in the Preferred
Stock Exchange Agreement, and the outcome of litigation to which the Company is
a party, as well as the risks and uncertainties that are set forth from time to
time in the Company's SEC reports, including its report on Form 10-K for the
year ended December 31, 1998 and its Form 10-Q for the quarter ended September
30, 1999.
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