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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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) October 8, 1998
IMPAC MORTGAGE HOLDINGS, INC.
(Name of registrant as specified in its charter)
MARYLAND 33-0675505
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
20371 IRVINE AVENUE
SANTA ANA HEIGHTS, CALIFORNIA 92707
(Address of principal executive offices) (Zip Code)
ISSUER'S TELEPHONE NUMBER: (714) 556-0122
_____________________________________________________________________
(Former name or former address, if changed since last report)
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Item 5. Other Events
On December 22, 1998, in connection with the Company's Prospectus
Supplement to the Prospectus, File No. 333-34137 (the "Registration Statement"),
that was declared effective by the Securities and Exchange Commission on May 8,
1998, the Company entered into a Placement Agent Agreement (the "Placement Agent
Agreement") with EVEREN Securities, Inc. (the "Placement Agent"). The Placement
Agent Agreement provides for the offer and sale of 1,200,000 shares of Series B
10.5% Cumulative Convertible Preferred Stock (the "Preferred Stock") by the
Placement Agent on a best efforts basis. The Placement Agent is not obligated
and does not intend to itself take (or purchase) any of the Preferred Stock.
The Placement Agent has been filed as an exhibit to this report and is
incorporated by reference herein. This report, including the Placement Agent
Agreement filed as an exhibit hereto, is incorporated by reference into the
Registration Statement.
Item 7. Financial Statements and Exhibits
(c) Exhibits
1.3 Form of Placement Agent Agreement
3.1b Articles Supplementary
4.9 Form of Series B 10.5% Cumulative Convertible Preferred Stock
Certificate
12.2 Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends
23.1 Independent Auditors' Consent IMH
23.2 Independent Auditors' Consent IFC
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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.
Date: December 23, 1998
IMPAC MORTGAGE HOLDINGS, INC.
BY: /s/ Richard Johnson
-------------------------------------
Richard Johnson
Executive Vice President Finance
and Chief Financial Officer
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EXHIBIT 1.3
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Impac Mortgage Holdings, Inc.
_________________________
1,200,000 Shares of Series B 10.5% Cumulative Convertible Preferred Stock
($25 Liquidation Preference Per Share)
December 22, 1998
PLACEMENT AGENCY AGREEMENT
EVEREN Securities, Inc.
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Impac Mortgage Holdings, Inc.
________________________________
1,200,000 Shares of Series B 10.5% Cumulative Convertible Preferred Stock
($25 Liquidation Preference Per Share)
PLACEMENT AGENCY AGREEMENT
December 22, 1998
EVEREN Securities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601-1994
as Placement Agent
Dear Sir or Madam:
Impac Mortgage Holdings, Inc., a Maryland corporation (the "Company"), proposes
to issue and sell up to 1,200,000 shares (the "Shares") of Series B 10.5%
Cumulative Convertible Preferred Stock (the "Series B Preferred Stock"), to
certain investors (collectively, the "Investors"). The Company desires to engage
you as its exclusive placement agent (the "Placement Agent") in connection with
such issuance and sale. The Series B Preferred Stock is more fully described in
the Prospectus (as defined herein).
The Company hereby confirms as follows its agreements with the Placement Agent.
1. Agreement to Act as Placement Agent. On the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions of this Agreement, the Placement Agent
agrees to act as the Company's exclusive placement agent in connection with the
issuance and sale, on a best efforts basis, by the Company of the Shares to the
Investors. The Company shall pay to the Placement Agent a cash fee of 4.0% of
the gross proceeds received by the Company from the sale of the Shares as set
forth on the cover page of the Prospectus.
2. Delivery and Payment. At 10:00 a.m., Chicago time, on December 22,
1998, or at such other time on such other date or dates as may be agreed upon by
the Company and the Placement Agent (each such date is hereinafter referred to
as
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a "Closing Date"), each of the Investors purchasing Shares on such Closing
Date will deposit, by wire transfer of immediately available funds, an amount
equal to the Public Offering Price per Share as shown on the cover page of the
Prospectus multiplied by the number of Shares purchased by it into an account
designated by the Company, and the Company shall deliver the Shares to the
Investors. The closing with respect to any such purchase (each a "Closing")
shall take place at the offices of Freshman, Marantz, Orlanski, Cooper & Klein,
9100 Wilshire Boulevard, 8th Floor, Beverly Hills, California 90212. All
actions taken at any Closing shall be deemed to have occurred simultaneously.
Certificates evidencing the Shares shall be in definitive form and shall be
registered in such names and in such denominations as the Placement Agent shall
request by written notice to the Company. For the purpose of expediting the
checking and packaging of certificates for the Shares, the Company agrees to
make such certificates available for inspection at least 24 hours prior to
delivery to the Investors.
3. Representations and Warranties of the Company. The Company represents
and warrants and covenants to the Placement Agent that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (collectively referred to as the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder. A
registration statement (Registration No. 333-34137) on Form S-3 relating
to the Shares, including a form of prospectus relating to the Shares and
such amendments to such registration statement as may have been required to
the date of this Agreement, has been prepared by the Company, under the
provisions of the Act and the Rules and Regulations, and has been filed
with the Commission. The Commission has not issued any order preventing or
suspending the effectiveness of such registration statement or the use of
the Prospectus or Preliminary Prospectus (as defined herein), if any, and
no proceeding for that purpose has been instituted or, to the knowledge of
the Company, threatened by the Commission. The term "Preliminary
Prospectus" as used herein means a preliminary prospectus relating to the
Shares as contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules
and Regulations included at any time as part of the registration statement.
Copies of such registration statement, each Preliminary Prospectus (if
any), the Prospectus and any amendment or supplement and all documents
incorporated by reference therein that were filed with the Commission on or
prior to the date of this Agreement have been delivered to the Placement
Agent. A final prospectus relating to the Shares containing information
permitted to be omitted at the time of effectiveness by Rule 430A will be
filed by the Company with the Commission in accordance with Rule 424(b) of
the Rules and Regulations promptly after execution and delivery of this
Agreement. The term "Registration Statement" means the registration
statement as amended at the time it became effective, including all
material incorporated by reference therein
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and any information deemed to be included by Rule 430A. The term
"Prospectus" means the prospectus relating to the Shares as first filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations,
including all material, if any, incorporated by reference therein.
(b) On the date that any Preliminary Prospectus was filed with the
Commission, the date the Prospectus is first filed with the Commission
pursuant to Rule 424(b) (if required), at all times subsequent to and
including each Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to
the Prospectus is filed with the Commission, the Registration Statement,
each Preliminary Prospectus (if any) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any
amendment or supplement thereto), including the financial statements
included in the Prospectus, did or will comply with all applicable
provisions of the Act and the Rules and Regulations and did or will contain
all statements required to be stated therein in accordance with the Act and
the Rules and Regulations. On the Effective Date and when any post-
effective amendment to the Registration Statement becomes effective, no
part of the Registration Statement or any such amendment did or will
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading. At the Effective Date, at the date the
Prospectus or any amendment or supplement to the Prospectus is filed with
the Commission and at each Closing Date the Prospectus did not or will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Company has
not distributed any offering material in connection with the offering or
sale of the Series B Preferred Stock, other than the Registration
Statement, the Preliminary Prospectus (if any), the Prospectus, the
Company's Annual Report on Form 10-K for the year ended December 31, 1997
(the "Annual Report"), the Company's Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1998, June 30, 1998 and September 30, 1998
(the "Quarterly Reports") and the Company's Current Reports on Form 8-K
filed on February 11, 1998, June 3, 1998, June 4, 1998, October 14, 1998,
December 8, 1998 and December 18, 1998 (the "Current Reports").
(c) The documents incorporated by reference in the Registration
Statement, Preliminary Prospectus (if any) or Prospectus, or any amendment
or supplement thereto, when they became or become effective under the Act
or were or are field with the Commission under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as the case may be, conformed or
will conform in all material respects with the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder.
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(d) The Company is a corporation duly organized, validly existing and
in good standing under the laws of Maryland. The Company has full corporate
power and authority to own or lease all the assets owned or leased by it
and to conduct its business as described in the Registration Statement, the
Preliminary Prospectus (if any) and Prospectus. The Company is duly
licensed or qualified to conduct its business and in good standing as a
foreign organization in all jurisdictions in which the nature of the
activities conducted by it or the character of the assets owned or leased
by it makes such licensing or qualification necessary, except where failure
to so license or qualify, considering all such cases in the aggregate,
would not have a material adverse effect on the business, prospects,
properties, condition (financial or otherwise), net worth or results of
operations of the Company and its subsidiaries (which term as used herein
shall include entities consolidated with the Company for the purposes of
generally accepted accounting principles ("GAAP")), taken as a whole.
Complete and correct copies of the articles or certificate of incorporation
and of the bylaws of the Company and its subsidiaries, and all amendments
thereto have been delivered to the Placement Agent, and no changes therein
will be made subsequent to the date hereof and prior to any Closing Date,
except that Articles Supplementary to the Corporation's charter (the
"Articles Supplementary") will be filed with the State Department of
Assessments and Taxation of Maryland in order to designate and reclassify
the Series B Preferred Stock.
(e) Each "significant subsidiary" (as defined in Section 1-02 of
Regulation S-X under the Act) of the Company is duly organized, validly
existing and in good standing in the jurisdiction of its incorporation and
has full corporate power and authority to conduct all the activities
conducted by it, to own or lease all the assets owned or leased by it and
to conduct its business as described in the Registration Statement or
Prospectus. Each such significant subsidiary is duly licensed or qualified
to conduct its business and in good standing as a foreign organization in
all jurisdictions in which the nature of the activities conducted by it or
the character of the assets owned or leased by it makes such licensing or
qualification necessary, except where failure to so license or qualify
would not have a material adverse effect on the business, prospects,
properties, condition (financial or otherwise), net worth or results of
operations of the Company and its subsidiaries, taken as a whole. All the
outstanding shares of capital stock of each of such significant
subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are wholly owned by the Company directly or through
subsidiaries (other than the outstanding common stock of Impac Funding
Corporation, which represents 1% of the economic interest in such
corporation, and which is owned by Joseph R. Tomkinson, William S. Ashmore
and Richard J. Johnson), free and clear of any lien, adverse claim,
security interest, equity or other encumbrance, except as described in the
Registration Statement or Prospectus. The only
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such significant subsidiaries of the company are Impac Funding Corporation,
IMH Assets Corp. and Impac Warehouse Lending Group, Inc.
(f) The issued and outstanding shares of capital stock of the Company
have been duly authorized, are validly issued, fully paid and nonassessable
and are not subject to any preemptive or similar rights. The Company has an
authorized, issued and outstanding capitalization as of September 30, 1998
as set forth under the caption "Capitalization" in the Prospectus. The
description of the securities of the Company contained in or incorporated
by reference into the Registration Statement and the Prospectus is complete
and accurate in all respects.
(g) This Agreement been duly authorized and validly executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms,
subject to the effects of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar laws relating to or affecting creditors' rights
generally and by general equitable principles.
(h) The issuance and sale of the Shares hereunder have been duly
authorized by the Company, and the Shares, when issued and paid for in
accordance with this Agreement, will be duly and validly issued, fully paid
and nonassessable and will not be subject to preemptive or similar rights.
The holders of the Shares will not be subject to personal liability by
reason of being such holders. The Shares, when issued, will conform to the
description thereof set forth in the Prospectus.
(i) The financial statements and the related notes and schedules
contained in or incorporated by reference into the Registration Statement
and the Prospectus present fairly the consolidated financial condition of
the Company and its subsidiaries as of the respective dates thereof and the
results of operations, stockholders' equity and cash flows at the
respective dates and for the respective periods covered thereby, all in
conformity with GAAP applied on a consistent basis throughout the entire
period involved, except as otherwise disclosed therein. No other financial
statements or schedules of the Company, its subsidiaries, or any other
entity are required by the Act or the Rules and Regulations to be included
in the Registration Statement or the Prospectus. KPMG Peat Marwick LLP (the
"Accountants"), who have reported on such financial statements and
schedules, are independent accountants with respect to the Company and its
subsidiaries as required by the Act and the Rules and Regulations. Such
financial statements and the related notes and schedules contained in or
incorporated by reference into the Registration Statement and the
Prospectus have been prepared in conformity with the requirements of the
Act and the Rules and Regulations and present fairly the information
presented therein, and the other financial and statistical information
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and data included in or incorporated by reference into the Registration
Statement and the Prospectus are accurately presented and prepared on a
basis consistent with such financial statements and the books and records
of the Company and its subsidiaries.
(j) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(k) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to each
Closing Date, except as set forth in or contemplated by the Registration
Statement and the Prospectus, (i) there has not been any change in the
capitalization of the Company or its subsidiaries other than non-material
changes in the ordinary course of business, or any material adverse change,
or any development involving a prospective material adverse change, in the
business, prospects, properties, condition (financial or otherwise), net
worth or results of operations of the Company or its subsidiaries arising
for any reason whatsoever, (ii) the Company and its subsidiaries have not
incurred any liabilities or obligations, direct or contingent, nor has the
Company or its subsidiaries entered into any transactions not in the
ordinary course of business other than pursuant to this Agreement, the
Registration Statement and the transactions referred to herein and therein,
and (iii) the Company has not paid or declared any dividends or other
distributions of any kind on any class of its capital stock.
(l) Any real property and buildings held under lease to the Company or
its subsidiaries are held or leased by them under valid, binding and
enforceable leases conforming to the description thereof incorporated by
reference into the Registration Statement and the Prospectus, with such
exceptions as do not materially adversely affect the business, prospects,
properties, condition (financial or otherwise), net worth or results of
operations of the Company and its subsidiaries, taken as a whole.
(m) The Company is not, and upon the issuance and sale of the Series B
Preferred Stock as contemplated herein and the application of the net
proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment company,"
as such terms are defined in the Investment Company Act of 1940, as amended
(the
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"Investment Company Act"), and is not required to be registered under the
Investment Company Act.
(n) Except as set forth or referred to in the Registration Statement
and the Prospectus, there are no actions, suits or proceedings pending, or
to the Company's knowledge, threatened, against or affecting the Company or
its subsidiaries or any of their respective officers in their capacity as
such, before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign,
wherein an unfavorable ruling, decision or finding might materially
adversely affect the business, prospects, properties, condition (financial
or otherwise), net worth or results of operations of the Company and its
subsidiaries, taken as a whole.
(o) Except in each case as would not materially adversely affect the
business, prospects, properties, condition (financial or otherwise), net
worth or results of operations of the Company and its subsidiaries, taken
as a whole, each of the Company and each subsidiary has (i) all
governmental or regulatory licenses, permits, certificates, consents,
orders, approvals and other authorizations necessary to carry on its
business as contemplated in the Prospectus (or if the Prospectus is not in
existence, the most recent Preliminary Prospectus, if any), (ii) no reason
to believe that any governmental body or agency is considering limiting,
suspending or revoking any such license, permit, certificate, consent,
order, approval or other authorization, (iii) complied with all laws,
statutes, ordinances, rules, regulations and orders applicable to either it
or its business, (iv) not received any notice to the effect that, or
otherwise been advised that, it is not in compliance with any such law,
statute, ordinance, rule, regulation or order, and is not aware of any
existing circumstances which are likely to result in material violations of
any of the foregoing, (v) good and marketable title to all of the
properties and assets described in the Prospectus as owned by it, free and
clear of all liens, charges, encumbrances or restrictions, (vi) peaceful
and undisturbed possession under all material leases to which it is party
as lessee, and (vii) performed all its obligations required to be
performed, and is not in default under, any indenture, mortgage, deed of
trust, voting trust agreement, loan agreement, bond, debenture, note
agreement, lease, contract or other agreement or instrument (collectively,
the "contract or other agreements") to which it is a party or by which its
property is bound or affected, except as otherwise set forth in the
Registration Statement and the Prospectus, and, to the Company's knowledge,
no other party under any contract or other agreement to which it is a party
is in default in any respect thereunder. Neither the Company nor its
subsidiaries are in violation of any provision of their respective
organizational or governing documents.
(p) The Company has all corporate power and authority to enter into
this Agreement and to carry out the provisions and conditions hereof, and
all
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consents, authorizations, approvals and orders of any court, government, or
governmental agency or body having jurisdiction over the Company or its
properties or operations required in connection herewith have been
obtained, except such as may be required under state securities or Blue Sky
laws or the by-laws and rules of the National Association of Securities
Dealers, Inc. (the "NASD").
(q) Neither the execution of this Agreement, nor the issuance,
offering or sale of the Shares, nor the consummation of any of the
transactions contemplated herein, nor the compliance by the Company with
the terms and provisions hereof will conflict with, result in a breach of
any of the terms and provisions of, constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon, any
property or assets of the Company or its subsidiaries pursuant to the terms
of any contract or other agreement to which the Company or its subsidiaries
may be bound or to which any of the property or assets of the Company or
its subsidiaries is subject, nor will such action result in any violation
of the provisions of the Company's or any subsidiaries' organizational or
governing documents or any statute or any order, rule or regulation
applicable to the Company or its subsidiaries of any court or Federal,
state or other regulatory authority or other government body having
jurisdiction over the Company or its subsidiaries, except for such
conflicts, breaches, defaults, liens, charges, encumbrances or violations
which will not have a material adverse effect on business, prospects,
properties, condition (financial or otherwise), net worth or results of
operations of the Company and its subsidiaries, taken as a whole.
(r) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required.
(s) The Company and its directors, officers or controlling persons
have not taken, directly or indirectly, any action intended, or which might
reasonably be expected, to cause or result, under the Act or otherwise, in,
or which has constituted, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Series B
Preferred Stock.
(t) Except as described in the Registration Statement and as have been
waived by all such holders, no holder of securities of the Company has or
will have rights to the registration of any securities of the Company as a
result of the filing of the Prospectus or Preliminary Prospectus (if any).
(u) Neither the Company nor any of its subsidiaries are involved in
any material labor dispute nor is any such dispute threatened.
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(v) None of the Company or any of its subsidiaries or any of their
respective employees or agents have made any payment of funds of the
Company or its subsidiaries, or received or retained any such funds in
violation of any law, rule or regulation where such actions are of a
character required to be disclosed in the Prospectus.
(w) The Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to,
insurance covering all real and personal property owned or leased by the
Company and its subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(x) The Company, either directly or indirectly through its
subsidiaries, has sufficient patent rights, trademarks, trade names,
copyrights, licenses, approvals and governmental authorizations to conduct
its business as described in the Prospectus; except as described in the
Prospectus, the expiration of any patent rights, trademarks, trade names,
copyrights, licenses, approvals or governmental authorizations would not
have a material adverse effect on the business, prospects, properties,
condition (financial or otherwise), net worth or results of operations of
the Company and its subsidiaries taken as a whole; and the Company has no
knowledge of any material infringement by it of patent rights, trademark,
trade name rights, copyrights, licenses, trade secrets or other similar
rights of others, and there is no claim being made against the Company or
any of its subsidiaries regarding patents, trademark, trade names,
copyright, license, trade secrecy or other infringement which could have a
material adverse effect on the business, prospects, properties, condition
(financial or otherwise), net worth or results of operations of the Company
and its subsidiaries, taken as a whole.
(y) Except as would not materially adversely affect the business,
prospects, properties, condition (financial or otherwise), net worth or
results of operations of the Company and its subsidiaries, taken as a
whole, the business, operations and properties of the Company and its
subsidiaries have been and are being conducted in compliance with all
applicable laws, ordinances, rules, regulations, licenses, permits,
approvals, plans, authorizations or requirements relating to occupational
safety and health, or pollution, or protection of health or the environment
(including, without limitation, those relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants or hazardous or
toxic substances, materials or wastes into ambient air, surface water,
groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, gaseous or liquid in
nature) of any governmental department, commission, board, bureau, agency
or
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instrumentality of the United States, any state or political subdivision
thereof, or any foreign jurisdiction, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto, and neither the Company nor its subsidiaries has received
any notice from any governmental instrumentality or any third party
alleging any violation thereof or liability thereunder (including, without
limitation, liability for costs of investigating or remediating sites
containing hazardous substances and/or damages to natural resources).
(z) The Company and its qualified real estate investment trust
subsidiaries are organized in conformity with the requirements for
qualification as, and operate in a manner that qualifies them as, real
estate investment trusts under the Intenal Revenue Code of 1986, as amended
(the "Code"), and the rules and regulations thereunder and will be so
qualified immediately after consummation of the transactions contemplated
by this Agreement.
4. Agreements of the Company. The Company covenants and agrees with the
Placement Agent as follows:
(a) The Company, during such period as a prospectus relating to the
Shares would be required by law to be delivered in connection with sales of
the Shares by an underwriter or dealer, (i) will not file any amendment or
supplement to the Registration Statement or the Prospectus, unless a copy
thereof shall first have been submitted to the Placement Agent within a
reasonable period of time prior to the filing thereof and the Placement
Agent shall not have objected thereto in good faith, (ii) will furnish to
the Agent at the time of filing thereof a copy of any document that upon
filing is deemed to be incorporated by reference into the Registration
Statement or Prospectus, and (iii) will cause each amendment or supplement
to the Prospectus to be filed with the Commission as required pursuant to
the applicable paragraph of Rule 424(b) of the Rules and Regulations or, in
the case of any document to be incorporated therein by reference, to be
filed with the Commission as required pursuant to the Exchange Act, within
the time period prescribed.
(b) The Company will notify the Placement Agent promptly, and will
confirm such advice in writing, (i) of any request by any securities or
other governmental authority (including, without limitation, the
Commission) of any jurisdiction for amendments or supplements to the
Registration Statement or the Prospectus or for additional information,
(ii) of the issuance by any securities or other governmental authority
(including, without limitation, the Commission) of any jurisdiction of any
stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose or the threat thereof,
(iii) of the happening of any event during the period mentioned in Section
4(a) that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue or
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that requires the making of any changes in the Registration Statement or
the Prospectus in order to make the statements therein, in light of the
circumstances in which they are made, not misleading and (iv) of receipt by
the Company or any representative or attorney of the Company of any other
communication from any securities or other governmental authority
(including, without limitation, the Commission) of any jurisdiction
relating to any of the Registration Statement, any Preliminary Prospectus
or the Prospectus. If at any time any securities or other governmental
authority (including, without limitation, the Commission) of any
jurisdiction shall issue any order suspending the effectiveness of the
Registration Statement, the Company will promptly use best efforts to
obtain the withdrawal of such order.
(c) If, at any time when a Prospectus relating to the Shares is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus, as then amended or supplemented, would, in the
judgment of counsel to the Company or counsel to the Placement Agent,
include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or the
Registration Statement, as then amended or supplemented, would, in the
judgment of counsel to the Company or counsel to the Placement Agent,
include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading, or if for any
other reason it is necessary, in the judgment of counsel to the Company or
counsel to the Placement Agent, at any time to amend or supplement the
Prospectus or the Registration Statement to comply with the Act or the
Rules and Regulations, the Company will promptly notify the Placement Agent
and, subject to Section 4(a) hereof, will promptly prepare and file with
the Commission, at the Company's expense, an amendment to the Registration
Statement or an amendment or supplement to the Prospectus that corrects
such statement or omission or effects such compliance and will deliver to
the Placement Agent, without charge, such number of copies thereof as the
Placement Agent may reasonably request. The Company consents to the use of
the Prospectus or any amendment or supplement thereto by the Placement
Agent.
(d) The Company will furnish to the Placement Agent and its counsel,
without charge, (i) two copies of the registration statement described in
Section 3(a) hereof, including financial statements and schedules, and all
exhibits thereto and (ii) so long as a prospectus relating to the Shares is
required to be delivered under the Act, as many copies of each Preliminary
Prospectus (if any) or the Prospectus or any amendment or supplement
thereto as the Placement Agent may reasonably request.
(e) The Company will comply with all the undertakings contained in the
Registration Statement.
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(f) Prior to the sale of the Shares to the Investors, the Company will
cooperate with the Placement Agent and its counsel in connection with the
registration or qualification of the Shares for offer and sale under the
state securities or Blue Sky laws of such jurisdictions as the Placement
Agent may request; provided, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
(g) During the period of three years commencing on the date hereof,
the Company will furnish to the Placement Agent copies of such financial
statements and other periodic and special reports as the Company may from
time to time distribute generally to the holders of any class of its
capital stock, and will furnish to the Placement Agent a copy of each
annual or other report it shall be required to file with the Commission.
(h) The Company will make generally available to holders of its
securities, as soon as may be practicable, but in no event later than the
last day of the fifteenth full calendar month following the current
calendar quarter, a consolidated earnings statement (which need not be
audited but shall be in reasonable detail) for a period of 12 months ended
commencing after the Effective Date, and satisfying the provisions of
Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
(i) The Company will not at any time, directly or indirectly, take
any action intended, or which might reasonably be expected, to cause or
result in, or which will constitute, stabilization of the price of the
Shares to facilitate the sale or resale of any of the Shares.
(j) The Company will apply the net proceeds from the offering and sale
of the Shares in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
5. Expenses. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay
all costs and expenses incident to the performance of the obligations of the
Company under this Agreement, including but not limited to costs and expenses of
or relating to (a) the preparation, printing and filing of the Registration
Statement and exhibits thereto, each Preliminary Prospectus (if any), the
Prospectus and any amendment or supplement to the Prospectus, including all
fees, disbursements and other charges of counsel to the Company, (b) the
preparation and delivery of certificates representing the Shares, (c) furnishing
(including costs of shipping and mailing) such copies of the Registration
Statement, the Prospectus and any Preliminary Prospectus, and all amendments and
supplements to the Prospectus, as may be requested for use in connection with
the direct placement of the Shares, (d) the listing, if any, of the
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Shares on the American Stock Exchange ("AMEX"), (e) any filings required to be
made by the Placement Agent with the NASD and the registration or qualification
of the Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 4(f), including the reasonable
fees, disbursements and other charges of counsel to the Placement Agent in
connection therewith, and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, and (f) fees, disbursements and other
charges of counsel to the Company. The Company shall reimburse the Placement
Agent for its travel, legal and other out-of-pocket expenses incurred in
connection with the engagement hereunder, up to a maximum of $30,000.
6. Conditions of the Obligations of the Placement Agent. The obligations
of the Placement Agent hereunder are subject to the following conditions:
(a) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding for that purpose shall
be pending or threatened by any securities or other governmental authority
(including, without limitation, the Commission); (ii) no order suspending
the effectiveness of the Registration Statement or the qualification or
registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by any securities or other
governmental authority; (iii) any request for additional information on
the part of the staff of any securities or other governmental authority
(including, without limitation, the Commission) shall have been complied
with, to the Company's knowledge, to the satisfaction of the staff of the
Commission or such authority; and (iv) after the date hereof no amendment
or supplement to the Registration Statement or the Prospectus shall have
been filed unless a copy thereof was first submitted to the Placement Agent
and the Placement Agent did not object thereto in good faith..
(b) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, neither the Company nor any of
its subsidiaries shall have sustained any material loss or interference
with its business or properties from fire, explosion, flood or other
casualty, whether or not covered by insurance, or from any labor dispute or
any court or legislative or other governmental action, order or decree,
which is not set forth in the Registration Statement and the Prospectus, if
in the sole judgment of the Placement Agent any such development makes it
impracticable or inadvisable to consummate the sale and delivery of the
Shares to Investors at the offering price.
(c) Each of the representations and warranties of the Company
contained herein shall be true and correct at each Closing Date, as if made
on such date, and all covenants and agreements herein contained to be
performed
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on the part of the Company and all conditions herein contained to be
fulfilled or complied with by the Company at or prior to such Closing Date
shall have been duly performed, fulfilled or complied with.
(d) The Placement Agent shall have received an opinion, dated each
Closing Date, of Freshman, Marantz, Orlanski, Cooper & Klein ("Freshman,
Marantz"), counsel to the Company, in form and substance satisfactory to
the Placement Agent, to the effect that:
(i) the Company and each "significant subsidiary" (as such term
is defined in Rule 1-02 of Regulation S-X under the Act) of the
Company have been duly incorporated and are validly existing in good
standing under the laws of their jurisdictions of incorporation and
are duly qualified to transact business as foreign corporations and
are in good standing under the laws of all other jurisdictions where
the ownership or leasing of their properties or the conduct of their
businesses requires such qualification, except where the failure to be
so qualified or in good standing would not have a material adverse
effect on the business, prospects, properties, condition
(financial or otherwise), net worth or results of operations of the
Company and the significant subsidiaries, taken as a whole;
(ii) the Company and each such significant subsidiary have full
power and authority to own or lease all the assets owned or leased by
them and to conduct their businesses as described in the Registration
Statement and the Prospectus; and the Company has all corporate power
and authority to enter into this Agreement, and to carry out the
provisions and conditions hereof;
(iii) the Company had an authorized capitalization as of
September 30, 1998 as set forth under the caption "Capitalization" in
the Prospectus; all of the issued shares of capital stock of the
Company have been duly authorized and validly issued, and are fully
paid and nonassessable and free of preemptive or other similar
rights;
(iv) the Articles Supplementary have been duly authorized,
approved and adopted by all necessary action on the part of the
Company. The Company has filed the Articles Supplementary with the
State of Maryland and has made any other required filings with the
State of Maryland necessary to create the Series B Preferred Stock.
(v) the issuance and sale of (A) the Shares to be purchased on
such Closing Date and (B) shares of common stock, par value $.01 per
share, of the Company (the "Common Stock") reserved for issuance upon
conversion or redemption of the Shares (the "Conversion Shares")
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have been duly authorized by the Company, and such Shares and
Conversion Shares, when issued and paid for in accordance with this
Agreement or upon conversion, as applicable, will be duly and validly
issued, fully paid and nonassessable and will not be subject to
preemptive or other similar rights; the holders of such Shares will
not be subject to personal liability by reason of being such holders,
except to the extent that (A) a director is held liable under Section
2-312(a) of the Maryland General Corporation Law (the "MGCL") for an
unlawful distribution to the stockholder, who accepted the
distribution knowing the distribution was made in violation of the
Company's charter or Section 2-311 of the MGCL, or (B) liability is
imposed on the stockholder by law in connection with, and to the
extent of, a distribution made pursuant to a voluntary or involuntary
dissolution of the Company; such Shares, when issued, will conform to
the description thereof set forth in the Prospectus; and such Shares
and Conversion Shares are the subject of an effective registration
statement permitting their sale in the manner contemplated by this
Agreement or upon conversion of the Conversion Shares;
(vi) the execution and delivery of this Agreement have been duly
authorized by all necessary action of the Company, and this Agreement
has been duly executed and delivered by the Company and is the legal,
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws
of general applicability relating to or affecting creditors'
rights and to general principles of equity;
(vii) the description in the Registration Statement and
Prospectus of statutes, legal and governmental proceedings, contracts
and other documents are accurate in all material respects and fairly
present the information required to be shown, and, to such counsel's
knowledge, no legal or governmental proceedings are pending to which
the Company or the significant subsidiaries or any of their respective
officers or to which the property of the Company or the significant
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not described
therein, and, to such counsel's knowledge, no such proceedings have
been threatened against the Company or the significant subsidiaries or
with respect to any of their respective assets; and, to the best of
such counsel's knowledge, no contract or other document is required to
be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement that is not
described therein or filed as required;
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(viii) the Registration Statement is effective under the Act,
and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or any post-
effective amendment thereto and no order directed at any amendment or
supplement thereto has been issued, and no proceedings for that
purpose have been instituted or threatened or are contemplated by the
Commission;
(ix) the Company is not, and upon the issuance and sale of the
Shares and the application of the net proceeds therefrom as described
in the Prospectus will not be, an "investment company" as such term is
defined under the Investment Company Act, and is not required to be
registered under the Investment Company Act;
(x) commencing with the Company's taxable year ended December
31, 1995, the Company has been organized in conformity with the
requirements for qualification as a "real estate investment trust,"
and its proposed method of operation has enabled and will enable it to
meet the requirements for qualification and taxation as a "real estate
investment trust" under the Code. The information presented in the
Prospectus under the caption "Federal Income Tax Considerations," to
the extent it constitutes matters of law or legal conclusions, is
accurate in all material respects.
(xi) the Registration Statement, when it became effective, and
the Prospectus (in each case, not including the financial statements,
schedules and other financial and statistical information contained or
incorporated by reference therein, as to which such counsel need
express no opinion), on the date of filing thereof with the
Commission, complied as to form in all material respects with the
applicable requirements of the Act and the Rules and Regulations; and
the documents incorporated by reference in the Registration Statement
or Prospectus (in each case, not including the financial statements,
schedules and other financial and statistical information contained or
incorporated by reference therein, as to which such counsel need
express no opinion), when filed with the Commission, complied as to
form in all material respects with the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder;
(xii) neither the issuance, offering and sale of the Shares
pursuant hereto nor the compliance by the Company with the other
provisions of this Agreement require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained (it being
understood that
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<PAGE>
such counsel need express no opinion with respect to state securities
or Blue Sky Laws or the bylaws and rules of the NASD);
(xiii) neither the execution or delivery of this Agreement, nor
the offering, issuance or sale of the Shares or the Conversion Shares,
nor the compliance by the Company with the terms and provisions hereof
or of the Articles Supplementary will conflict with, or result in a
breach or violation of, any of the terms and provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or of the significant subsidiaries pursuant to the terms of,
(A) any material contract or other agreement known to such counsel to
which the Company or any subsidiary is a party or by which the Company
or any significant subsidiary or any of their respective properties or
assets are subject, (B) the organizational or governing documents of
the Company or any subsidiary, or (C) any judgment, decree or order of
any court or other governmental authority or any arbitrator known to
such counsel and applicable to the Company or any significant
subsidiary, except such as would not materially adversely affect the
business, prospects, properties, condition (financial or otherwise),
net worth or results of operations of the Company and the significant
subsidiaries, taken as a whole;
(xiv) The initial purchasers of the Shares in accordance with
the terms hereof shall not be subject to the limitations set forth in
Section 7.1 of the charter of the Company. The initial purchase of the
Shares in accordance with the terms hereof shall not cause any initial
purchaser thereof to be deemed to be an "Acquiring Person" as defined
in the Company's Rights Agreement dated October 7, 1998, as amended
December 17, 1998.
Freshman, Marantz shall also state that in the course of the
preparation of the Registration Statement and the Prospectus, such
counsel has participated in conferences with officers and
representatives of the Company and with the Accountants, at which
conferences the contents of the Registration Statement and the
Prospectus were discussed and, on the basis of the foregoing, that
they have no reason to believe that the Registration Statement, as of
its effective date and as of the date of such opinion, contained or
contains any untrue statement of a material fact or omitted or omits
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus,
as of its filing date and the date of such opinion, contained or
contains any untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the
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circumstances under which they were made, not misleading (other than
financial statements, schedules and other financial and statistical
data included therein, as to which such counsel need express no view).
In rendering any such opinion, Freshman, Marantz may rely, as to
matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and public
officials and, as to matters involving the application of laws of any
jurisdictions in which such counsel are not admitted to practice, to
the extent satisfactory in form and substance to counsel for the
Placement Agent, upon the opinion of Brown & Wood LLP. The foregoing
opinion shall also state that the Placement Agent is justified in
relying upon such opinion of Brown & Wood LLP, and copies of such
opinion shall be delivered to the Placement Agent and its counsel.
References to the Registration Statement and the Prospectus in this
paragraph (f) shall include any amendment or supplement thereto at the
date of such opinion.
(e) Concurrently with the execution and delivery of this Agreement,
the Accountants shall have furnished to the Placement Agent a letter, dated
the date of its delivery (the "Original Letter"), addressed to the
Placement Agent and in form and substance satisfactory to the Placement
Agent. At each Closing Date, the Accountants shall have furnished to the
Placement Agent a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set
forth in the Original Letter, that nothing has come to their attention
during the period from the date of the Original Letter to a date (specified
in the letter) not more than three days prior to such Closing Date which
would require any change in the Original Letter if it were required to be
dated and delivered at such Closing Date.
(f) At each Closing Date, there shall be furnished to the Placement
Agent a certificate, dated the date of its delivery, signed by the Chairman
of the Board, the President or a Vice President and by the principal
financial or accounting officer of the Company, to the effect that:
(i) each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at
the time such certificate is delivered, true and correct in all
material respects; and
(ii) each of the covenants required herein to be performed by
the Company on or prior to the date of such certificate has been duly,
timely and fully performed and each condition herein required to be
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complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
(g) The Shares shall be qualified for sale in such states as the
Placement Agent may reasonably request, and each such qualification shall
be in effect and not subject to any stop order or other proceeding on such
Closing Date.
(h) The Placement Agent shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact that in the Placement Agent's
opinion is material, or omits to state a fact that in the Placement Agent's
opinion is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(i) The Company shall have furnished to the Placement Agent such
certificates, in addition to those specifically mentioned herein, as the
Placement Agent may have reasonably requested as to the accuracy and
completeness at such Closing Date of any statement in the Registration
Statement or the Prospectus, as to the accuracy at such Closing Date of the
representations and warranties of the Company, as to the performance by the
Company of its obligations hereunder, or as to the fulfillment of the
conditions concurrent and precedent to the obligations hereunder of the
Placement Agent.
(j) The Company and the initial purchasers of the Shares shall have
entered into a Stock Purchase Agreement substantially in the form of
Exhibit A hereto.
---------
7. Indemnification.
(a) The Company shall indemnify and hold harmless the Placement Agent,
the directors, officers, employees and agents of the Placement Agent and
each person, if any, who controls the Placement Agent within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against
any and all losses, claims, liabilities, expenses and damages, joint or
several (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which it, or
any of them, may become subject under the Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based
on (i) any untrue statement or alleged untrue statement made by the Company
in Section 3 of this Agreement, (ii) any untrue statement or alleged untrue
statement of any material fact contained in (A) any Preliminary Prospectus,
the Registration Statement or the Prospectus or any amendment or supplement
to the
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Registration Statement or the Prospectus, (B) any document incorporated by
reference into the Registration Statement and (C) any application or other
document, or any amendment or supplement thereto, executed by the Company
based upon written information furnished by or on behalf of the Company
filed in any jurisdiction in order to qualify the Shares under the
securities or Blue Sky laws thereof or filed with the Commission or any
securities association or securities exchange (each, an "Application") or
(iii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any supplement
to the Registration Statement or the Prospectus or any document
incorporated by reference into the Registration Statement or any
Application a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they
were made, not misleading; provided, however, that the Company will not be
liable to the extent that such loss, claim, liability, expense or damage
arises from the sale of the Shares pursuant to this Agreement and is based
solely on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to
the Placement Agent furnished in writing to the Company by the Placement
Agent expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
In addition to its other obligations under this paragraph (a), the Company
agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based
upon any statement or omission, or any alleged statement or omission, or
any inaccuracy in the representations and warranties of the Company in this
Agreement or failure to perform its obligations in this Agreement, all as
described in this paragraph (a), it will reimburse the Placement Agent on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the
Company's obligation, to reimburse the Placement Agent for such expenses
and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the
Placement Agent shall promptly return it to the Company together with
interest, compounded daily, determined on the basis of the Prime Rate (or
other commercial lending rate for borrowers of the highest credit standing)
published from time to time The Wall Street Journal (the "Prime Rate"). Any
such interim reimbursement payments which are not made to the Placement
Agent within 30 days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request.
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(b) The Placement Agent will indemnify and hold harmless the Company,
each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signs the Registration
Statement to the same extent as the foregoing indemnity from the Company to
the Placement Agent, but only insofar as losses, claims, liabilities,
expenses or damages arise out of or are based on any untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to the Placement Agent furnished in
writing to the Company by the Placement Agent expressly for use in the
Registration Statement, any Preliminary Prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that the Placement
Agent might otherwise have; provided, however, that in no event shall the
Placement Agent be liable or responsible for any amount in excess of the
total commissions received by the Placement Agent.
(c) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement
of any action against such party in respect of which a claim is to be made
against an indemnifying party or parties under this Section 7, notify each
such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying
party will not relieve it from any liability that it may have to any
indemnified party under the foregoing provisions of this Section 7 unless,
and only to the extent that, such omission results in the forfeiture of
substantive rights or defenses by, or otherwise prejudices, the
indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent
that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly
notified, to assume the defense of the action, with counsel satisfactory to
the indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying
party will not be liable to the indemnified party for any legal or other
expenses except as provided below and except for the reasonable costs of
investigation incurred by the indemnified party in connection with the
defense. The indemnified party will have the right to employ its own
counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such indemnified party unless (i)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has
reasonably concluded (based on advice of counsel) that a conflict exists
(based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party that would prevent the counsel
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selected by the indemnifying party from representing the indemnified party
(in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (iii) the
indemnifying party has not in fact employed counsel to assume the defense
of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party
or parties shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified
party or parties. All such fees, disbursements and other charges will be
reimbursed by the indemnifying party promptly as they are incurred. The
Company will not, without the prior written consent of the Placement Agent,
settle or compromise or consent to the entry of any judgment in any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification has been sought hereunder (whether or not the Placement
Agent or any person who controls the Placement Agent within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act is a party to such
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of the Placement Agent and each
such controlling person from all liability arising out of such claim,
action, suit or proceeding. An indemnifying party will not be liable for
any settlement of any action or claim effected without its written consent
(which consent will not be unreasonably withheld).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but
for any reason is held to be unavailable from the Company or the Placement
Agent, the Company and the Placement Agent will contribute to the total
losses, claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding
or any claim asserted, but after deducting any contribution received by the
Company from persons other than the Placement Agent such as persons who
control the Company within the meaning of the Act or the Exchange Act,
officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the
Company and the Placement Agent may be subject in such proportion as shall
be appropriate to reflect the relative benefits received by the Company on
the one hand and the Placement Agent on the other. The relative benefits
received by the Company on the one hand and the Placement Agent on the
other shall be deemed to be in the same proportion as the total net
proceeds from the
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offering (before deducting Company expenses) received by the Company as set
forth in the table on the cover page of the Prospectus bear to the fee
received by the Placement Agent hereunder. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one
hand, and the Placement Agent on the other, with respect to the statements
or omissions which resulted in such loss, claim, liability, expense or
damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Placement Agent, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Company and the Placement Agent agree that it would not be
just and equitable if contributions pursuant to this Section 7(d) were to
be determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of
the loss, claim, liability, expense or damage, or action in respect
thereof, referred to above in this Section 7(d) shall be deemed to include,
for purpose of this Section 7(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 7(d), the Placement Agent shall not be required to contribute any
amount in excess of the fee received by it, and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) will be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 7(d), any
person who controls a party to this Agreement within the meaning of the Act
or the Exchange Act will have the same rights to contribution as that
party, and each officer of the Company who signed the Registration
Statement will have the same rights to contribution as the Company, subject
in each case to the provisions hereof. Any party entitled to contribution,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim for contribution may be made under this
Section 7(d), will notify any such party or parties from whom contribution
may be sought, but the omission so to notify will not relieve the party or
parties from whom contribution may be sought from any other obligation it
or they may have under this Section 7(d). No party will be liable for
contribution with respect to any action or claim settled without its
written consent (which consent will not be unreasonably withheld).
8. Termination.
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(a) The obligations of the Placement Agent under this Agreement may be
terminated at any time prior to the first Closing Date, by notice to the
Company from the Placement Agent, without liability on the part of the
Placement Agent to the Company if, prior to delivery and payment for the
Shares, in the sole judgment of the Placement Agent (i) any material
adverse change, or any development that is reasonably expected to cause a
material adverse change, in the business, prospects, properties, condition
(financial or otherwise), net worth or results of operations of the Company
and its subsidiaries, taken as a whole, has occurred, which in the judgment
of the Placement Agent, materially impairs the investment quality of the
Shares, (ii) the Company shall have filed, refused or been unable, at or
prior to such Closing Date, to perform any agreement on its part to be
performed hereunder, (iii) trading in the Common Stock of the Company shall
have been suspended by the Commission or by AMEX, (iv) trading in
securities generally on the New York Stock Exchange or AMEX shall have been
suspended or limited or minimum or maximum prices shall have been generally
established on any of such exchanges, or additional material governmental
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by any of such exchanges or by
order of the Commission or any court or other governmental authority, (v) a
general banking moratorium shall have been declared by Federal or New York
authorities or (vi) any material adverse change in the financial or
securities markets in the United States or any outbreak or material
escalation of hostilities or declaration by the United States of a national
emergency or war or other calamity or crisis shall have occurred, the
effect of any of which is such as to make it, in the sole judgment of the
Placement Agent, impracticable or inadvisable to market the Shares on the
terms and in the manner contemplated by the Prospectus.
(b) The obligations of the Company under this Agreement (except those
specified in Section 10 hereof) may be terminated at any time (i) after
December 31, 1998, if the closing of the purchase of at least 1,000,000
shares of Series B Preferred Stock has not occurred, and (ii) after January
31, 1999, if the closing of the purchase of all of the Shares has not
occurred.
9. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, to 20371 Irvine Avenue, Santa Ana Heights,
California, 92707, Attention: General Counsel or (b) if to the Placement Agent,
to EVEREN Securities, Inc., 77 West Wacker Drive, Chicago, Illinois, 60601-1994,
Attention: Syndicate Department. Any such notice shall be effective only upon
receipt. Any notice under Section 7 may be made by facsimile or telephone, but
if so made shall be subsequently confirmed in writing.
10. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and the
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<PAGE>
Placement Agent set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, the Placement Agent or any controlling person
referred to in Section 7 hereof and (ii) delivery of and payment for the Shares.
The respective agreements, covenants, indemnities and other statements set forth
in Sections 5 and 7 hereof shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement.
11. Successors. This Agreement shall inure to the benefit of and shall be
binding upon the Placement Agent, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the
indemnification and contribution contained in Sections 7(a) and (d) of this
Agreement shall also be for the benefit of the directors, officers, employees
and agents of the Placement Agent and any person or persons who control the
Placement Agent within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnification and contribution contained in Sections
7(b) and (d) of this Agreement shall also be for the benefit of the directors
and officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No Investor shall be deemed a
successor because of such purchase.
12. Headings. Section headings in this Agreement are for convenience of
reference only, do not constitute a part of this Agreement, and shall not affect
its interpretation.
13. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Placement
Agent.
14. Applicable Law; Severability. The validity and interpretations of
this Agreement, and the terms and conditions set forth herein, shall be governed
by and construed in accordance with the laws of the State of Illinois, without
giving effect to any provisions relating to conflicts of laws. Whenever
possible each provision and term of this Agreement will be interpreted in a
manner to be effective and valid but if any provision or term of this agreement
is held to be prohibited or invalid, then such provision or term will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.
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<PAGE>
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicate hereof, whereupon it will
become a binding agreement between the Company and the Placement Agent in
accordance with its terms.
Very truly yours,
IMPAC MORTGAGE HOLDINGS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
The foregoing Placement Agency
Agreement is hereby confirmed
and accepted as of the date
first above written.
EVEREN SECURITIES, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
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<PAGE>
EXHIBIT A
FORM OF STOCK PURCHASE AGREEMENT
See attached.
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<PAGE>
EXHIBIT 3.1b
ARTICLES SUPPLEMENTARY
OF
SERIES B 10.5% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
IMPAC MORTGAGE HOLDINGS, INC.
Impac Mortgage Holdings, Inc., a corporation organized and existing under
the laws of the State of Maryland (the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority granted to and vested in the Board of
-----
Directors of the Corporation (the "Board of Directors") in accordance with
Article VI of the charter of the Corporation, including these Articles
Supplementary (the "Charter"), the Board of Directors adopted resolutions
reclassifying 1,200,000 shares (the "Shares") of Preferred Stock (as defined in
the Charter) as a separate series of stock, Series B 10.5% Cumulative
Convertible Preferred Stock, $.01 par value per share (the "Series B Preferred
Stock"), with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends or other distributions,
qualifications, and terms and conditions of redemption set forth below. Upon
any restatement of the Charter, the immediately following heading and Sections 1
through 10 of this Article FIRST shall become Section 6.7 of Article VI of the
Charter.
Series B 10.5% Cumulative Convertible Preferred Stock
Section 1. Definitions. Unless the context otherwise requires, the terms
defined in this Section 1 shall have, for all purposes of these
Articles Supplementary, the meanings herein specified (with terms
defined in the singular having comparable meanings when used in
the plural).
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a person means a person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the person specified.
"AMEX" shall mean the American Stock Exchange.
"Average Net Worth" for any period means the arithmetic average of the sum
of the gross proceeds from any sale of the Corporation's equity securities,
before deducting any underwriting discounts and commissions and other expenses
(without taking into account any losses incurred in prior periods) computed by
taking the daily average of such values during such period.
"Benefit Plan Investor" means (1) an employee benefit plan (as defined by
Section 3(3) of ERISA), whether or not it is subject to Title I of ERISA; (2) a
plan as described in Section 4975 of the Code; (3) an entity whose underlying
assets include the assets of any plan described in clause (1) or (2) by reason
of the plan's investment in such entity (including but not limited to an
insurance company general account); or (4) an entity that otherwise constitutes
a "benefit plan investor" within the meaning of the Plan Asset Regulation.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series B Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New York
are not required to be open.
"Change of Control Transaction" means the occurrence of (i) an acquisition
after the date hereof, in one or a series of related transactions, by any
individual or legal entity or "group" (as described in Rule 13d-5(b)(1) under
the Exchange Act) of more than 50% of the voting securities of the Corporation
or all or substantially all of the assets of
<PAGE>
the Corporation; (ii) any merger or consolidation of the Corporation with or
into another entity, in one or a series of related transactions, unless the
holders of the Corporation's securities immediately prior to such transaction
continue to hold, immediately after such transaction, at least 50% of the voting
securities of the entity that survives such transaction; or (iii) the execution
by the Corporation of an agreement to which the Corporation is a party or by
which it is bound providing for any of the events set forth above in (i) or
(ii).
"Common Stock" shall mean the common stock, $.01 par value per share, of
the Corporation or such shares of the Corporation's capital stock into which
outstanding shares of Common Stock shall be reclassified.
"Constituent Person" shall have the meaning set forth in subsection (d) of
Section 8.
"Conversion Date" means the date on which a Series B Holder has delivered
written notice to the Corporation that such Series B Holder elects to convert
Series B Preferred Stock into Common Stock, together with the certificate
evidencing such shares of Series B Preferred Stock.
"Conversion Price" shall mean the conversion price per share of Common
Stock at which shares of the Series B Preferred Stock is convertible into shares
of Common Stock, as such Conversion Price may be adjusted pursuant to Section 8.
The initial Conversion Price shall be $4.95 (equivalent to a conversion rate of
5.050505 shares of Common Stock for each share of Series B Preferred Stock).
"Current Market Price" of publicly traded Common Stock or any other class
of shares or other security of the Corporation or any other issuer for any day
shall mean the last reported sales price, regular way, on such day or, if no
sale takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the AMEX or, if
such security is not listed or admitted for trading on the AMEX, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any national
securities exchange, on the Nasdaq National Market or, if such security is not
quoted on the Nasdaq National Market, the average of the closing bid and asked
prices on such day in the over-the-counter market as reported by Nasdaq or, if
bid and asked prices for such security on such day shall not have been reported
through Nasdaq, the average of the bid and asked prices on such day as furnished
by any AMEX member firm regularly making a market in such security and selected
for such purpose by the Chief Executive Officer of the Corporation or the Board
of Directors or, if such security is not so listed or quoted, as determined in
good faith at the sole discretion of the Chief Executive Officer of the
Corporation or the Board of Directors, which determination shall be final,
conclusive and binding.
"Distribution Payment Date" shall have the meaning set forth in Section 4.
"Distribution Period" shall have the meaning set forth in Section 4.
"Dividend Ratchet Amount" shall mean for any calendar quarter, the
aggregate of all distributions (including non-regular dividends such as special
capital gain distributions) declared on the number of shares of Common Stock (or
portions thereof, without giving effect to the requirements under subsection (c)
of Section 8) into which each share of Series B Preferred Stock is then
convertible (i.e., an amount equal to the number of shares of Common Stock (or
portions thereof, without giving effect to the requirements under subsection (c)
of Section 8) into which one share of Series B Preferred Stock is convertible,
multiplied by the aggregate of all distributions (including non-regular
dividends) declared per share of Common Stock for such quarter).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the fair market value as determined in good
faith at the sole discretion of the Chief Executive Officer or the Board of
Directors, which determination shall be final, conclusive and binding.
"Incentive Compensation" shall mean the performance based compensation that
the Corporation shall be obligated to pay to certain employees of the
Corporation pursuant to their employment agreements.
"Issue Date" shall mean the first date on which Series B Preferred Stock is
issued and sold.
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<PAGE>
"Junior Shares" shall have the meaning set forth in Section 3.
"Liquidation Preference" means $25.00 per share of Series B Preferred
Stock, plus accumulated and unpaid distributions (whether or not earned or
declared) thereon.
"Net Income" means, at any date of determination, the net income of the
Corporation determined in accordance with current tax law before the total
Incentive Compensation paid to employees of the Corporation pursuant to their
respective employment agreements, the deduction for dividends paid, before any
amortization of the Termination Fee paid Imperial Credit Advisors, Inc. and any
net operating loss deductions arising from losses in prior periods.
"Non-Electing Share" shall have the meaning set forth in subsection (d) of
Section 8.
"Ownership Limitation" means the limitation on ownership of the
Corporation's shares (or deemed ownership by virtue of the attribution
provisions of the Code) set forth in Article VII, Section 7.1 of the Charter.
"Parity Shares" shall have the meaning set forth in Section 3.
"Person" shall mean an individual, corporation, partnership, estate, trust
(including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity, and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Plan Asset Regulation" means the plan asset regulation promulgated by the
Department of Labor under ERISA at 29 C.F.R. 2510.3-101.
"Plan Assets" means "plan assets" as defined in the Plan Asset Regulation.
"Preferred Stock" shall mean preferred stock, $.01 par value per share, of
the Corporation.
"Record Date" shall have the meaning set forth in Section 4.
"Redemption Price" shall equal $25.00 per share of Series B Preferred
Stock, plus dividends accumulated and unpaid to the redemption date (whether or
not declared) without interest, or in the case of redemption pursuant to
subsection (f) of Section 5, such other amount referred to therein.
"REIT" shall mean a real estate investment trust under Section 856 of the
Code.
"Return on Equity" means return calculated for any quarter by dividing the
Corporation's Net Income for such quarter by the Corporation's Average Net Worth
for such quarter.
"Series B Holder" means a holder of Series B Preferred Stock.
"Series B Preferred Stock" shall mean the Corporation's Series B 10.5%
Cumulative Convertible Preferred Stock, $.01 par value per share, liquidation
preference $25.00 per share.
"Series B Preferred Stock Redemption Date" shall have the meaning set forth
in subsection (g) of Section 5.
"Set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of distributions by the Board of Directors, the allocation of funds
to be paid on any class or series of shares; provided, however, that if any
funds for any class or series of Junior Shares or any Parity Shares are placed
in a separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series B
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
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<PAGE>
"Shares-in-Trust" means shares of the Corporation transferred as set forth
in Article VII, Subsection (b) of Section 7.2.1of the Charter.
"Ten Year Average Yield" means the average yield to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of 10 years).
"Ten Year U.S. Treasury Rate" for a quarterly period shall mean the
arithmetic average of the weekly per annum Ten Year Average Yields published by
the Federal Reserve Board during such quarter. In the event that the Federal
Reserve Board does not publish a weekly per annum Ten Year Average Yield during
any week in a quarter, then the Ten Year U.S. Treasury Rate for such week shall
be the weekly per annum Ten Year Average Yields published by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the Corporation
for such week. In the event that the Corporation determines in good faith that
for any reason the Corporation cannot determine the Ten Year U.S. Treasury Rate
for any quarter as provided above, then the Ten Year U.S. Treasury Rate for such
quarter shall be the arithmetic average of the per annum average yields to
maturity based upon the daily closing bids during such quarter for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than securities which can, at the option of the holder, be
surrendered at face value in payment of any federal estate tax) with a final
maturity date not less than eight nor more than 12 years from the date of each
such quotation, as chosen and for each business day (or less frequently if daily
quotations shall not be generally available) in each such quarterly period in
New York City to the Corporation by at least three recognized dealers in U.S.
Government securities selected by the Corporation.
"Trading Day" shall mean any day on which the securities in question are
traded on the AMEX, or if such securities are not listed or admitted for trading
on the AMEX, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market, or if such
securities are not quoted on such Nasdaq National Market, in the applicable
securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in subsection (d) of Section
7.
"Transfer Agent" means Boston Equiserve, L.P., Boston, Massachusetts or
such other agent or agents of the Corporation as may be designated by the Board
of Directors or its designee as the transfer agent for the Series B Preferred
Stock.
"Triggering Event" means any one or more of the following events (whatever
the reason and whether it shall be voluntary or involuntary or effected by
operation of law or pursuant to any judgment, decree or order of any court, or
any order, rule or regulation of any administrative or governmental body): (i)
the failure of the Common Stock to be listed on AMEX, the New York Stock
Exchange or the Nasdaq National Market System for a period of three (3)
consecutive Trading Days; (ii) any Common Stock issued upon conversion of Series
B Preferred Stock, as a distribution in respect thereof, or upon redemption
thereof is not, at the time certificates representing such shares are delivered,
listed on each national securities exchange or quotation system upon which the
Common Stock is then listed; (iii) the Corporation shall fail for any reason to
deliver certificates representing shares of Common Stock required to be issued
in lieu of cash dividends on any Distribution Payment Date within the ten (10)
days immediately following such Distribution Payment Date; or (iv) the
occurrence of any Change of Control Transaction where the aggregate
consideration per share of Common Stock, valued (if all or any portion of the
consideration is in the form of securities rather than cash) at the average
closing price for such securities as reported by the principal stock exchange or
over-the-counter trading market where such securities are listed for a period of
twenty (20) Trading Days immediately following the Change of Control
Transaction, in connection therewith is less than 110% of the Conversion Price
as in effect on the date thereof.
"25% Threshold" means ownership by Benefit Plan Investors, in the
aggregate, of 25% or more of the value of any class of equity interest in the
Corporation (calculated by excluding the value of any interest held by any
person, other than a Benefit Plan Investor, who has discretionary authority or
control with respect to the assets of the Corporation or any person who provides
investment advice to the Corporation for a fee (direct or indirect) with respect
to such assets, or any affiliate of such person).
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<PAGE>
"Underlying Shares" means, collectively, the shares of Common Stock into
which any shares of Series B Preferred Stock are convertible and the shares of
Common Stock issuable upon payment of distributions thereon in accordance with
the terms hereof.
Section 2. Designation and Amount. There shall be a series of Preferred
Stock that shall be designated as "Series B 10.5% Cumulative
Convertible Preferred Stock" and the number of shares
constituting such series shall be 1,200,000. Such number of
shares may be increased or decreased by resolution of the Board
of Directors, subject to the terms of Section 7; provided,
however, that no decrease shall reduce the number of shares of
Series B Preferred Stock to less than the number of shares then
issued and outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
Section 3. Ranking. In respect of rights to receive distributions and to
participate in distributions or payments in the event of any
liquidation, dissolution or winding up of the Corporation, the
Series B Preferred Stock shall rank pari passu with any other
shares of preferred stock of the Corporation that the Board of
Directors of the Corporation shall designate as ranking pari
passu (the "Parity Shares"), and will rank senior to the Common
Stock, the Series A Junior Participating Preferred Stock and any
other class or series of shares of the Corporation that the Board
of Directors has not designated as ranking senior to or pari
passu with the Series B Preferred Stock (collectively, the
"Junior Shares").
Section 4. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior
and superior to the Series B Preferred Stock with respect to
dividends, the holders of the then outstanding shares of
Series B Preferred Stock shall be entitled to receive, when,
as and if authorized and declared by the Board of Directors
out of any funds legally available therefor cumulative
dividends in an amount per share equal to the greater of (1)
$0.65625 per quarter (equal to a rate of 10.5% of the $25.00
liquidation preference (the "Liquidation Preference") per
annum) or (2) the Dividend Ratchet Amount. If for any reason
the Corporation elects not to pay cash dividends on any
quarterly Distribution Payment Date, the Corporation shall
pay such dividends by issuing on such Distribution Payment
Date, as a stock dividend on the then outstanding shares of
Series B Preferred Stock, the number of shares of Common
Stock equal to 100% of the cash dividend accumulated on such
Distribution Payment Date, divided by the average closing
sales price of the Common Stock as reported by the principal
stock exchange or over-the-counter trading market where the
Common Stock is listed for the twenty (20) Trading Days
prior to the Business Day that immediately precedes the
Distribution Payment Date. Quarterly dividends on the Series
B Preferred Stock are payable as authorized by the Board of
Directors, or if not authorized, on the fourth Tuesday of
January, April, July and October of each year, commencing on
or about April 27, 1999 (each such day being hereinafter
called a "Distribution Payment Date" and each calendar
quarter immediately preceding a Distribution Payment Date
being hereinafter called the "Distribution Period"
corresponding to such Distribution Payment Date), with
respect to each Distribution Period, to stockholders of
record of the Series B Preferred Stock as they appear on the
stock transfer records of the Corporation at the close of
business on the dividend record dates authorized by the
Board of Directors, or if none are authorized, on the last
Friday of December, March, June and September (each, a
"Record Date"). The amount of any distribution payable for
the initial Distribution Period and for any other
Distribution Period greater or less than a full calendar
quarter shall be prorated and computed on the basis of a
360-day year of twelve 30-day months. Distributions on each
share of Series B Preferred Stock shall accumulate from and
including the date of original issuance thereof, whether or
not (1) distributions on such shares are earned or declared
or (2) on any Distribution Payment Date there shall be funds
legally available for the payment of distributions.
Distributions paid on the Series B Preferred Stock in an
amount less than the total amount of such distributions at
the time accumulated and payable on such shares shall be
allocated pro rata on a per share basis
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<PAGE>
among all such shares of Series B Preferred Stock at the
time outstanding. Distributions on account of any arrearage
for any past Distribution Periods may be declared and paid
at any time, without reference to any regular distribution,
as may be fixed by the Board of Directors.
The amount of any distributions accumulated on any shares of
Series B Preferred Stock at any Distribution Payment Date shall
be the amount of any unpaid distributions accumulated thereon
through and during such Distribution Period, to and including
such Distribution Payment Date, whether or not earned or
declared, and the amount of distributions accumulated on any
shares of Series B Preferred Stock at any date other than a
Distribution Payment Date shall be equal to the sum of the amount
of any unpaid distributions accumulated thereon, to and including
the last preceding Distribution Payment Date, whether or not
earned or declared. Accumulated but unpaid distributions will not
bear interest and the holders of the Series B Preferred Stock
will not be entitled to any distributions in excess of full
cumulative distributions as described herein.
If any shares of Series B Preferred Stock are outstanding, no
full distributions shall be declared or paid or set apart for
payment on any other class or series of Parity Shares or Junior
Shares for any period unless full cumulative distributions on the
Series B Preferred Stock have been declared and paid or declared
and a sum sufficient for the payment thereof has been set apart
for payment on the Series B Preferred Stock for all past
distribution periods and the then current distribution period. If
distributions are not paid in full, or not declared in full and a
sum sufficient for such full payment is not set apart for payment
thereof, upon the Series B Preferred Stock and any class or
series of Parity Shares, no distributions may be paid on Junior
Shares and all distributions declared upon Series B Preferred
Stock and upon any other class or series of Parity Shares shall
be paid or declared pro rata so that in all cases the amount of
distributions paid or declared per share on the Series B
Preferred Stock and Parity Shares shall bear to each other the
same ratio that accumulated distributions per share, including
distributions accumulated or in arrears, if any, on the Series B
Preferred Stock and Parity Shares bear to each other. Except as
provided in the preceding sentence, unless full cumulative
distributions on the Series B Preferred Stock have been paid or
declared and a sum sufficient for such full payment set apart for
payment for all past distribution periods and the then current
distribution period, no distributions (other than distributions
in shares of Common Stock or in any other Junior Shares) shall be
declared or paid or set apart for payment or other distribution
upon the Corporation's Common Stock, or, except as provided
above, on any other Junior Shares or Parity Shares, nor shall any
Common Stock or any other Junior Shares or Parity Shares be
redeemed, purchased or otherwise acquired for any consideration
(or any payment made to or available for a sinking fund for the
redemption of any such shares) by the Corporation or any
subsidiary of the Corporation (except in connection with a
redemption or purchase or other acquisition of Common Stock made
for purposes of an employee incentive or benefit plan, a
conversion into or exchange for Junior Shares or redemptions for
the purpose of preserving the Corporation's qualification as a
REIT). Any distribution payment made on the Series B Preferred
Stock shall first be credited against the earliest accumulated
but unpaid distribution due with respect to such shares which
remains payable. Holders of the Series B Preferred Stock shall
not be entitled to any distributions, whether payable in cash,
property or shares, in excess of full accumulated distributions
as herein provided. No interest or sum of money in lieu of
interest shall be payable in respect of any distribution payment
or payments on the Series B Preferred Stock that may be in
arrears.
If any shares of Series B Preferred Stock are outstanding, the
Corporation shall not declare or pay or set apart for payment any
cash dividend in respect of any Junior Shares during any
Distribution Payment Period unless full cumulative distributions
on the Series B Preferred Stock are paid in the same form (i.e.,
cash, Common Stock or any combination thereof) for such
Distribution Payment Period.
Except as provided in these Articles Supplementary, the Series B
Preferred Stock shall not be entitled to participate in the
earnings or assets of the Corporation.
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<PAGE>
Section 5. Redemption.
(a) Subject to subsection (c) of this Section 5, the Shares
will be redeemable at the Redemption Price by the
Corporation at any time between the second anniversary of
the date of the first issuance of Series B Preferred Stock
and the fifth anniversary of the date of the first issuance
of Series B Preferred Stock, if the closing sales price of
the Common Stock as reported by the principal stock exchange
or over-the-counter trading market where the Common Stock is
listed averages in excess of 150% of the Conversion Price
for a period of at least 20 consecutive Trading Days ending
within 30 days prior to the notice of redemption, payable at
the Corporation's option in Common Stock or cash, as set
forth in subsection (c) of this Section 5.
(b) The Shares are redeemable at any time at the Redemption
Price the Board of Directors deems it necessary to maintain
the Corporation's status as a REIT or to prevent the
Corporation's assets from being deemed "plan assets" under
the Plan Asset Regulation, pursuant to Section 9, payable at
the Corporation's option in Common Stock or cash, as set
forth in subsection (c) of this Section 5.
(c) On and after the fifth anniversary of the date of the first
issuance of Series B Preferred Stock and upon giving of
notice as provided below, the Series B Preferred Stock may
be redeemed at the option of the Corporation, in whole or
from time to time in part, at the Redemption Price, payable
at the Corporation's option in (1) Common Stock, equal in
number to the Redemption Price divided by the average of the
closing sales price of the Common Stock as reported by the
principal stock exchange or over-the-counter trading market
for the twenty (20) Trading Days prior to the Business Day
that immediately precedes the date fixed for redemption, or
(2) cash; provided, however, that the Corporation may redeem
shares of Series B Preferred Stock pursuant to subsection
(1) of this subsection (c) only if the closing sales price
of the Common Stock as reported by the principal stock
exchange or over-the-counter trading market for the twenty
(20) Trading Days prior to the Business Day that immediately
precedes the date fixed for redemption, exceeds the
Conversion Price in effect on the Business Day that
immediately precedes the date fixed for redemption .
Fractional shares will not be issued upon redemption of the
Series B Preferred Stock, but, in lieu thereof, the
Corporation will pay a cash adjustment based on the average
of the closing prices of the Common Stock on the twenty (20)
Trading Days prior to the business day immediately preceding
the date fixed for redemption.
(d) Upon the occurrence of a Triggering Event, each Series B
Holder shall (in addition to all other rights it may have
hereunder or under applicable law), have the right,
exercisable at the sole option of such Series B Holder, to
require the Corporation to redeem all or a portion of the
Series B Preferred Stock then held by such Series B Holder
for an amount in cash equal to the Redemption Price for each
share of Series B Preferred Stock then held by such Series B
Holder. For purposes of this Section, a share of Series B
Preferred Stock is outstanding until such date as the Series
B Holder shall have received Underlying Shares upon a
conversion (or attempted conversion) thereof.
(e) If fewer than all of the outstanding shares of Series B
Preferred Stock is to be redeemed, the shares to be redeemed
will be determined pro rata or by lot or in such other
manner as prescribed by the Board of Directors in its sole
discretion. In the event that such redemption is to be by
lot, if as a result of such redemption any holder of Series
B Preferred Stock would own shares in excess of the
Ownership Limitation, because such holder's shares of Series
B Preferred Stock were not redeemed, or were only redeemed
in part, then, except in certain instances, the Corporation
will redeem the requisite number of shares of Series B
Preferred Stock of such holder such that he will not own
shares in excess of the Ownership Limitation subsequent to
such redemption. A new certificate shall be issued
representing any unredeemed Series B Preferred Stock without
cost to the holder thereof.
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(f) At any time prior to such time, if ever, as the Series B
Preferred Stock qualifies as a "publicly offered security"
under the Plan Asset Regulation, or qualifies for another
exception from the "look-through" rule (i.e., the provisions
of paragraph (a)(2) of the Plan Asset Regulation), if the
Corporation determines that, as a result of transfers,
conversions or otherwise, Benefit Plan Investors own 25% or
more of the aggregate number of outstanding shares of Series
B Preferred Stock (excluding for this purpose any shares
held by persons exercising investment management authority
over the assets of the Corporation or providing investment
advice for a fee with respect to such assets and any
affiliates of such persons), the Corporation will have the
right to cause any number of Series B Preferred Stock that
are held by Benefit Plan Investors to be redeemed so that
following such redemption Benefit Plan Investors own less
than 25% of the outstanding Series B Preferred Stock (but in
no event may such redemptions reduce Benefit Plan Investor
ownership to less than 20% of the Series B Preferred Stock)
(excluding for this purpose any shares held by persons
exercising investment management authority over the assets
of the Corporation or providing investment advice for a fee
with respect to such assets and any affiliates of such
persons). Any such redemption will follow the redemption
procedures set forth herein, except that the Redemption Date
may be fewer than 30 days after the first notice of
redemption to the extent necessary to prevent the
Corporation's assets from being deemed Plan Assets and the
Redemption Price shall be the Fair Market Value of such
Series B Preferred Stock. If fewer than all the outstanding
shares of Series B Preferred Stock that are held by Benefit
Plan Investors are to be redeemed, the number of Series B
Preferred Stock to be redeemed will be determined by the
Board of Directors and such shares will be redeemed on a
pro-rata basis from the holders of such shares that are
Benefit Plan Investors in proportion to the number of
Series B Preferred Stock held by such holders or by any
other method as may be determined by the Board of Directors
in its sole discretion.
(g) Notice of any redemption will be given (1) if greater than
fifty (50) holders own the Series B Preferred Stock, by
publication in a newspaper of general circulation in the
City of New York, such publication to be made once a week
for two successive weeks commencing not less than 30 nor
more than 60 days prior to the date fixed for redemption; or
(2) if fifty (50) or fewer holders own the Series B
Preferred Stock, by mailing of a similar notice by the
Corporation, postage prepaid, not less than 30 nor more than
60 days prior to the redemption date, addressed to the
respective holders of record of the Series B Preferred Stock
to be redeemed at their respective addresses as they appear
on the stock transfer records of the Corporation and the
Company shall issue a press release related to the
redemption at the time of the mailing. The notice provided
shall state the Corporation's election to redeem such
shares, stating (1) the date fixed for redemption thereof
(the "Series B Preferred Stock Redemption Date"), (2) the
Redemption Price, (3) the number of shares to be redeemed
(and, if fewer than all the shares of Series B Preferred
Stock are to be redeemed, the number of shares to be
redeemed from such holder), (4) the place(s) where the
Series B Preferred Stock certificates are to be surrendered
for payment, (5) that distributions on the Series B
Preferred Stock will cease to accumulate on the specified
redemption date, (6) the date on which such holder's
conversion rights as to the Series B Preferred Stock shall
terminate and (7) whether the Redemption Price will be paid
in cash or shares of Common Stock.
(h) On or after the Series B Preferred Stock Redemption Date,
or in connection with a redemption under Section 5(d), each
holder of Series B Preferred Stock to be redeemed must
present and surrender his Series B Preferred Stock
certificate(s) to the Corporation at the place designated in
such notice or, in the case of a redemption under Section
5(d), at [insert place for notice to the Corporation], and
thereupon the Redemption Price of such shares will be paid
to or on the order of the person whose name appears on such
Series B Preferred Stock certificate(s) as the owner thereof
and each such Series B Preferred Stock certificate(s)
surrendered will be cancelled. From and after the Series B
Preferred Stock Redemption Date (unless the Corporation
defaults in payment of the redemption price, or such other
time as
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such certificates are delivered (in the case of a
redemption under Section 5(d)), all distributions on the
Series B Preferred Stock designated for redemption will
cease to accumulate and all rights of the holders thereof
(including conversion rights), except the right to receive
the redemption price thereof (including all accumulated and
unpaid distributions up to the Series B Preferred Stock
Redemption Date), will cease and terminate, and such shares
will not thereafter be transferred (except with the consent
of the Corporation) in the stock transfer records of the
Corporation, and such shares shall not be deemed to be
outstanding for any purpose whatsoever. At its election, the
Corporation, prior to the Series B Preferred Stock
Redemption Date, may irrevocably deposit the Redemption
Price of the Series B Preferred Stock so called for
redemption in trust for the holders thereof with a bank or
trust company, in which case such notice to holders of the
Series B Preferred Stock to be redeemed will (1) state the
date of such deposit, (2) specify the office of such bank or
trust company as the place of payment of the Redemption
Price and (3) call upon such holders to surrender the Series
B Preferred Stock certificates representing such shares at
such place on or about the date fixed in such redemption
notice (which may not be later than the Series B Preferred
Stock Redemption Date) against payment of the Redemption
Price. Any monies so deposited which remain unclaimed by the
holders of the Series B Preferred Stock at the end of two
years after the Series B Preferred Stock Redemption Date
will be returned by such bank or trust company to the
Corporation.
(i) Notwithstanding the foregoing, unless full cumulative
distributions on all outstanding Series B Preferred Stock
for all past Distribution Periods and the then current
Distribution Period have been paid, or declared and a sum
sufficient for the payment thereof set apart for payment,
(1) no Series B Preferred Stock shall be redeemed under
subsections (a), (b) or (c) of Section 5 unless all
outstanding shares of Series B Preferred Stock are
simultaneously redeemed; provided, however, that the
foregoing shall not prevent the purchase or acquisition of
Series B Preferred Stock (A) pursuant to subsection (f) of
Section 5 and Section 9 or (B) pursuant to a purchase or
exchange offer made on the same terms to holders of all
outstanding Series B Preferred Stock, and (2) the
Corporation shall not purchase or otherwise acquire directly
or indirectly any Series B Preferred Stock (except by
conversion into or exchange for shares of the Corporation
ranking junior to the Series B Preferred Stock as to
distribution rights and liquidation preference).
(j) The holders of Series B Preferred Stock at the close of
business on a Record Date will be entitled to receive the
distribution payable with respect to such Series B Preferred
Stock on the corresponding Distribution Payment Date
notwithstanding the redemption thereof between such Record
Date and the corresponding Distribution Payment Date or the
Corporation's default in the payment of the distribution
due. Except as provided above, the Corporation will make no
payment or allowance for unpaid distributions, whether or
not in arrears, on Series B Preferred Stock which have been
called for redemption.
(k) The Corporation covenants that any Common Stock issued upon
redemption of the Series B Preferred Stock shall be validly
issued, fully paid and nonassessable. The Corporation shall
use its reasonable best efforts to list the Common Stock
required to be delivered upon redemption of the Series B
Preferred Stock, prior to such delivery, upon each national
securities exchange, if any, upon which the shares of
outstanding Common Stock are listed at the time of such
delivery.
(l) The Series B Preferred Stock has no stated maturity date
and is not subject to any sinking fund or mandatory
redemption provisions, except as provided in subsection (d)
of Section 5.
Section 6. Liquidation Preference.
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<PAGE>
(a) Upon the voluntary or involuntary dissolution, liquidation
or winding up of the Corporation, the holders of the Series
B Preferred Stock then outstanding shall be entitled to
receive and to be paid out of the assets of the Corporation
legally available for distribution to its stockholders,
before any payment or distribution shall be made on any
Junior Shares, the amount of $25.00 per share of Series B
Preferred Stock, plus accumulated and unpaid distributions
(whether or not earned or declared) thereon.
(b) After the payment to the holders of the Series B Preferred
Stock of the full preferential amounts provided for in this
Section 6, the holders of the Series B Preferred Stock as
such shall have no right or claim to any of the remaining
assets of the Corporation.
(c) If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the
preference amounts payable with respect to the Series B
Preferred Stock and any Parity Shares are not paid in full,
no payment will be made to any holder of Junior Shares and
the holders of the Series B Preferred Stock and of such
Parity Shares will share ratably in any such distribution of
assets of the Corporation in proportion to the full
respective preferential amounts provided for in this Section
6 to which they are entitled.
(d) None of (1) the sale or transfer of all or substantially
all the property or business of the Corporation; (2) a
statutory share exchange by the Corporation; or (3) the
merger or consolidation of the Corporation into or with any
other entity or the merger or consolidation of any other
entity into or with the Corporation, shall be deemed to be a
dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section 6.
(e) In determining whether a distribution (other than upon
voluntary or involuntary liquidation), by dividend,
redemption or other acquisition of shares of the Corporation
or otherwise, is permitted under Maryland law, amounts that
would be needed, if the Corporation were to be dissolved at
the time of the distribution, to satisfy the preferential
rights upon dissolution of holders of Series B Preferred
Stock will not be added to the Corporation's total
liabilities.
Section 7. Voting Rights.
Except as provided below, the holders of the Series B Preferred Stock
shall not be entitled to vote at any meeting of the stockholders for any
purpose or otherwise to participate in any action taken by the Corporation or
the stockholders thereof, or to receive notice of any meeting of stockholders.
(a) In any matter in which the holders of Series B Preferred
Stock are entitled to vote (as expressly provided herein),
including any action by written consent, each share of
Series B Preferred Stock shall be entitled to one vote.
(b) As long as any Series B Preferred Stock remains outstanding,
in addition to any other vote or consent required by law or
the Charter, the Corporation will not, without the
affirmative vote or consent of the holders of at least four-
fifths of the shares of Series B Preferred Stock outstanding
at the time, given in person or by proxy, either in writing
or at a meeting (such series voting separately as a class),
(1) authorize or create, or increase the authorized or
issued amount of any class or series of shares ranking prior
or senior to the Series B Preferred Stock with respect to
the payment of distributions or the distribution of assets
upon liquidation, dissolution or winding up, or reclassify
any authorized shares of the Corporation into such shares,
or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any
such shares; (2) amend, alter or repeal the provisions of
these Articles Supplementary for the Series B Preferred
Stock; or (3) amend, alter or repeal the provisions of the
Corporation's By-laws, or Charter in connection with any
merger or consolidation, or otherwise (an "Event"), so as to
materially and adversely affect any right, preference,
privilege or voting power of the Series B Preferred Stock
(as determined by the Board of Directors in good faith);
provided, however, with respect to the occurrence
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<PAGE>
occurrence of any of the Events set forth in (3) above, so
long as the Series B Preferred Stock (or shares into which
the Series B Preferred Stock have been converted in any
successor entity to the Corporation) remains outstanding or,
if the Corporation is not the surviving entity, is converted
into a security with substantially identical rights,
preferences, privileges and voting power, then the
occurrence of any such Event shall not be deemed to
materially and adversely affect such rights, preferences,
privileges or voting power of the Series B Preferred Stock;
and provided further that (x) any increase in the amount of
the authorized Preferred Stock or the designation or
issuance of any additional Series B Preferred Stock or
Parity Shares, or (y) any increase in the amount of
authorized Series B Preferred Stock or any other Preferred
Stock, in each case ranking on a parity with or junior to
the Series B Preferred Stock with respect to payment of
distributions 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.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding Series B Preferred Stock shall have been
redeemed or called for redemption and sufficient Common Stock has been reserved
to effect such redemption or sufficient funds to effect such redemption shall
have been deposited in accordance with Section 5.
Section 8. Conversion.
Holders of Series B Preferred Stock shall have the right to convert
all or a portion of such shares into Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 8, a holder of Series B Preferred Stock shall have
the right, at his option, at any time to convert such shares
into the number of fully paid and nonassessable shares of
Common Stock obtained by dividing the aggregate Liquidation
Preference of such shares by the Conversion Price (as in
effect at the time and on the date provided for in the last
paragraph of subsection (b) of this Section 8) by
surrendering such shares to be converted, such surrender to
be made in the manner provided in subsection (b) of this
Section 8; provided, however, that the right to convert
shares called for redemption pursuant to Section 5 shall
terminate at the close of business on the Series B Preferred
Stock Redemption Date fixed for such redemption, unless the
Corporation shall default in making payment of any amounts
payable upon such redemption under Section 5 hereof.
(b) In order to exercise the conversion right, the holder of
Series B Preferred Stock to be converted shall surrender the
certificate evidencing such shares, duly endorsed or
assigned to the Corporation or in blank, at the office of
the Transfer Agent, accompanied by written notice to the
Corporation that the holder thereof elects to convert such
Series B Preferred Stock. Unless the shares issuable on
conversion are to be issued in the same name as the name in
which such shares of Series B Preferred Stock are
registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such
holder's duly authorized agent and an amount sufficient to
pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such
taxes have been paid).
Holders of Series B Preferred Stock at the close of business on a
Record Date shall be entitled to receive the distribution payable
on such shares on the corresponding Distribution Payment Date
notwithstanding the conversion thereof following such Record Date
and prior to such Distribution Payment Date. However, Series B
Preferred Stock surrendered for conversion during the period
between the close of business on any Record Date and the opening
of business on the corresponding Distribution Payment Date
(except shares converted after the issuance of a notice of
redemption with respect to a Series B Preferred Stock Redemption
Date during such period or coinciding with such Distribution
Payment Date, such Series B Preferred Stock being entitled to
such distribution on the
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<PAGE>
Distribution Payment Date) must be accompanied by payment of an
amount equal to the distribution payable on such shares on such
Distribution Payment Date. A holder of Series B Preferred Stock
on a Record Date who (or whose transferee) tenders any such
shares for conversion into Common Stock on such Distribution
Payment Date will receive the distribution payable by the
Corporation on such Series B Preferred Stock on such date, and
the converting holder need not include payment of the amount of
such distribution upon surrender of Series B Preferred Stock for
conversion. The Corporation shall make further payment or
allowance for, and a converting holder shall be entitled to,
unpaid distributions in arrears (excluding the then-current
quarter) on converted shares and for distributions on the Common
Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates
for Series B Preferred Stock as aforesaid, the Corporation shall
issue and shall deliver at such office to such holder, or on his
written order, a certificate or certificates for the number of
full shares of Common Stock issuable upon the conversion of such
shares in accordance with the provisions of this Section 8, and
any fractional interest in respect of a share of Common Stock
arising upon such conversion shall be settled as provided in
subsection (c) of this Section 8. Each conversion shall be deemed
to have been effected immediately prior to the close of business
on the date on which the certificates for Series B Preferred
Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the distribution
payable on such shares) received by the Corporation as aforesaid,
and the person or persons in whose name or names any certificate
or certificates for Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders
of record of the shares represented thereby at such time on such
date, and such conversion shall be at the Conversion Price in
effect at such time and on such date, unless the stock transfer
books of the Corporation shall be closed on that date, in which
event such person or persons shall be deemed to have become such
holder or holders of record at the opening of business on the
next succeeding day on which such stock transfer books are open,
but such conversion shall be at the Conversion Price in effect on
the date on which such certificates for Series B Preferred Stock
have been surrendered and such notice received by the
Corporation.
(c) No fractional shares or scrip representing fractions of
Common Stock shall be issued upon conversion of the Series B
Preferred Stock. Instead of any fractional interest in a
share of Common Stock that would otherwise be deliverable
upon the conversion of a share of Series B Preferred Stock,
the Corporation shall pay to the holder of such share an
amount in cash based upon the Current Market Price of Common
Stock on the Trading Day immediately preceding the date of
conversion. If more than one share of Series B Preferred
Stock shall be surrendered for conversion at one time by the
same holder, the number of shares of full Common Stock
issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Series B
Preferred Stock so surrendered.
(d) The Conversion Price or the securities into which the
Series B Preferred Stock is convertible shall be adjusted
from time to time as follows:
(1) if the Corporation's annualized Return on Equity for
the six months ended June 30, 1999 (computed by
multiplying the Return on Equity for such period by
two) is less than the Ten Year U.S. Treasury Rate plus
200 basis points, then the Conversion Price will be
reduced to $4.50 per share after August 15, 1999. Any
adjustment made pursuant to this subsection (d)(1)
shall become effective immediately after the opening of
business on August 16, 1999. If, prior to such date,
the Conversion Price is adjusted pursuant to any other
paragraph of this Section 8(d), the $4.50 price
referenced in this paragraph will be adjusted
accordingly.
(2) if the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation,
statutory share exchange, self tender offer for all or
substantially all of the
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Common Stock, sale of all or substantially all of the
Corporation's assets or recapitalization of the Common
Stock (each of the foregoing being referred to herein
as a "Transaction"), in each case as a result of which
Common Stock shall be converted into the right to
receive shares, stock, securities or other property
(including cash or any combination thereof), each share
of Series B Preferred Stock which is not converted into
the right to receive shares, stock, securities or other
property in connection with such Transaction shall
thereafter be convertible into the kind and amount of
shares, stock, securities and other property (including
cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that
number of Common Stock into which one share of Series B
Preferred Stock was convertible immediately prior to
such Transaction, assuming such holder of Common Stock
(1) is not a Person with which the Corporation
consolidated or into which the Corporation merged or
which merged into the Corporation or to which such sale
or transfer was made, as the case may be (a
"Constituent Person"), or an affiliate of a Constituent
Person and (2) failed to exercise his or her rights of
election, if any, as to the kind or amount of shares,
stock, securities and other property (including cash)
receivable upon consummation of such Transaction (each
a "Non-Electing Share") (provided that if the kind or
amount of shares, stock, securities and other property
(including cash) receivable upon consummation of such
Transaction by each Non-Electing Share is not the same
for each Non-Electing Share, then the kind and amount
of shares, stock, securities and other property
(including cash) receivable upon consummation of such
Transaction for each Non-Electing Share shall be deemed
to be the kind and amount so receivable per share by a
plurality of the Non-Electing Shares). The Corporation
shall not be a party to any Transaction unless the
terms of such Transaction are consistent with the
provisions of this subsection (d), and it shall not
consent or agree to the occurrence of any Transaction
until the Corporation has entered into an agreement
with the successor or purchasing entity, as the case
may be, for the benefit of the holders of the Series B
Preferred Stock, that will require such successor or
purchasing entity, as the case may be, to make
provision in its certificate or articles of
incorporation or other constituent documents to the end
that the provisions of this subsection (d) shall
thereafter correspondingly be made applicable as nearly
as may reasonably be, in relation to any shares of
stock or other securities or property thereafter
deliverable upon conversion of the Series B Preferred
Stock. The provisions of this subsection (d) shall
similarly apply to successive Transactions.
(3) if the Corporation shall at any time or from time to
time after the initial issuance of the Series B
Preferred Stock effect a subdivision of the outstanding
Common Stock, the Conversion Price then in effect
immediately before that subdivision shall be
proportionately decreased; conversely, if the
Corporation shall at any time or from time to time
after the initial issuance of the Series B Preferred
Stock reduce the outstanding shares of Common Stock by
combination or otherwise, the Conversion Price then in
effect immediately before the combination shall be
proportionately increased. Any adjustment under this
subsection (d)(3) shall become effective at the close
of business on the date the subdivision or combination
becomes effective.
(4) if the Corporation at any time or from time to time
after the initial issuance of the Series B Preferred
Stock shall make or issue, or fix a record date for the
determination of holders of Common Stock or other
securities entitled to receive, a dividend or other
distribution payable in additional shares of Common
Stock, then and in each such event the Conversion Price
for the Series B Preferred Stock then in effect shall
be decreased as of the time of such issuance or, in the
event such a record date shall have been fixed, as of
the close of business on such record
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<PAGE>
date, by multiplying the Conversion Price for the
Series B Preferred Stock then in effect by a fraction:
(a) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or
the close of business on such record date; and
(b) the denominator of which shall be the total
number of shares of Common Stock issued and
outstanding immediately prior to the time of such
issuance or the close of business on such record
date, plus the number of shares of Common Stock
issuable in payment of such dividend or
distribution; provided, however, if such record
date shall have been fixed and such dividend is
not fully paid or if such distribution is not
fully made on the date fixed therefor, the
Conversion Price for the Series B Preferred Stock
shall be recomputed accordingly as of the close of
business on such record date and thereafter the
Conversion Price for the Series B Preferred Stock
shall be adjusted pursuant to this subsection
(d)(4)(b) as of the time of actual payment of such
dividends or distributions.
(5) if the Corporation at any time or from time to time
after the initial issuance of the Series B Preferred
Stock shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in
securities of the Corporation other than shares of
Common Stock or securities of any other entity
(including a subsidiary of the Corporation) or other
property, then and in each such event provision shall
be made so that the holders of Series B Preferred Stock
shall receive upon conversion thereof in addition to
the number of shares of Common Stock receivable
thereupon, the amount of securities of the Corporation
or such other entity or other property that they would
have received had their Series B Preferred Stock been
converted into Common Stock on the date of such event
and had thereafter, during the period from the date of
such event to and including the conversion date,
retained such securities receivable by them as
aforesaid during such period giving application to all
adjustments called for during such period under this
Section 8 with respect to the rights of the holders of
the Series B Preferred Stock.
(6) If the Common Stock issuable upon the conversion of
the Series B Preferred Stock shall be changed into the
same or a different number of shares of any class or
classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision
or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation or
sale of assets provided for elsewhere in this Section
8), then and in each such event the holder of each
share of Series B Preferred Stock shall have the right
thereafter to convert such share into the kind and
amounts of shares of stock and other securities and
property receivable upon such reorganization,
reclassification or other change, by holders of the
number of shares of Common Stock into which such shares
of Series B Preferred Stock might have been converted
immediately prior to such reorganization,
reclassification or change, all subject to further
adjustment as provided herein.
(7) If and whenever on or after the original date of
issuance of shares of Series B Preferred Stock the
Corporation issues or sells, or in accordance with
subparagraph (b) of this subsection (d)(7) is deemed to
have issued or sold, any Junior Shares for a
consideration per share less than the Conversion Price
in effect immediately prior to the time of such
issuance or sale, then forthwith upon such issuance or
sale the Conversion Price will be reduced to an amount
determined by dividing (i) the sum
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of (A) the product derived by multiplying the
Conversion Price in effect immediately prior to such
issuance or sale by the number of shares of Common
Stock outstanding or deemed to be outstanding
immediately prior to such issuance or sale, plus (B)
the consideration, if any, received by the Corporation
upon such issuance or sale, by (ii) the number of
shares of Common Stock outstanding or deemed to be
outstanding immediately after such issuance or sale.
(a) For purposes of determining the adjusted
Conversion Price under subparagraph (a) of this
subsection (d)(7), the following will be
applicable:
(i) If the Corporation in any manner grants any
rights or options to subscribe for or to
purchase Junior Shares or any stock or other
securities convertible into or exchangeable
for Common Stock (such rights or options
being herein called "Options" and such
convertible or exchangeable stock or
securities being herein called "Convertible
Securities") and the price per share for
which Common Stock is issuable upon the
exercise of such Options or upon conversion
or exchange of such Convertible Securities is
less than the Conversion Price in effect
immediately prior to the time of the granting
of such Options, then the total maximum
number of Junior Shares issuable upon the
exercise of such Options or upon conversion
or exchange of the total maximum amount of
such Convertible Securities issuable upon the
exercise of such Options will be deemed to be
outstanding and to have been issued and sold
by the Corporation for such price per share.
For purposes of this subparagraph (b), the
"price per share for which Junior Shares are
issuable" will be determined by dividing (A)
the total amount, if any, received or
receivable by the Corporation as
consideration for the granting of such
Options, plus the minimum aggregate amount of
additional consideration payable to the
Corporation upon exercise of all such
Options, plus in the case of such Options
which relate to Convertible Securities, the
minimum aggregate amount of additional
consideration, if any, payable to the
Corporation upon the issuance or sale of such
Convertible Securities and the conversion or
exchange thereof, by (B) the total maximum
number of Junior Shares issuable upon the
exercise of Options or upon the conversion or
exchange of all such Convertible Securities
issuable upon the exercise of such Options.
No further adjustment of the Conversion Price
will be made when Convertible Securities are
actually issued upon the exercise of such
options or when Junior Stock is actually
issued upon the exercise of such Options or
the conversion or exchange of such
Convertible Securities.
(ii) If the Corporation in any manner issues or
sells any Convertible Securities and the
price per share for which Junior Shares are
issuable upon such conversion or exchange is
less than the Conversion Price in effect
immediately prior to the time of such issue
or sale, then the maximum number of Junior
Shares issuable upon conversion or exchange
of such Convertible Securities will be deemed
to be outstanding and to have been issued and
sold by the Corporation for such price per
share. For the purposes of this paragraph,
the "price per share for which
-15-
<PAGE>
Junior Shares are issuable" will be
determined by dividing (A) the total amount
received or receivable by the Corporation as
consideration for the issue or sale of such
Convertible Securities, plus the minimum
aggregate amount of additional consideration,
if any, payable to the Corporation upon the
conversion or exchange thereof, by (B) the
total maximum number of Junior Shares
issuable upon the conversion or exchange of
all such Convertible Securities. No further
adjustment of the Conversion Price will be
made when Junior Shares are actually issued
upon the conversion or exchange of such
Convertible Securities, and if any such
issuance or sale of such Convertible
Securities is made upon exercise of any
Options for which adjustments of the
Conversion Price had been or are to be made
pursuant to other provisions of this Section
8, no further adjustment of the Conversion
Price will be made by reason of such issue or
sale.
(iii) If the purchase price provided for in any
Options, the additional consideration, if
any, payable upon the conversion or exchange
of any Convertible Securities, or the rate at
which any Convertible Securities are
convertible into or exchangeable for Junior
Shares change at any time, the Conversion
Price in effect at the time of such change
will be readjusted to the Conversion Price
which would have been in effect at such time
had such Options or Convertible Securities
still outstanding provided for such changed
purchase price, additional consideration or
changed conversion rate, as the case may be,
at the time initially granted, issued or
sold; provided that if such adjustment would
result in an increase of the Conversion Price
then in effect, such adjustment will not be
effective until 30 days after written notice
thereof has been given by the Corporation to
all holders of shares of Series B Preferred
Stock.
(iv) Upon the expiration of any Option or the
termination of any right to convert or
exchange any Convertible Security without the
exercise of any such Option or right, the
Conversion Price then in effect hereunder
will be adjusted to the Conversion Price
which would have been in effect at the time
of such expiration or termination had such
Option or Convertible Security, to the extent
outstanding immediately prior to such
expiration or termination, never been issued.
(v) If any Junior Shares, Option or Convertible
Security is issued or sold or deemed to have
been issued or sold for cash, the
consideration received therefor will be
deemed to be the net amount received by the
Corporation therefor. In case any Junior
Shares, Options or Convertible Securities are
issued or sold for a consideration other than
cash, the amount of the consideration other
than cash received by the Corporation will be
the fair value of such consideration, except
where such consideration consists of
securities, in which case the amount of
consideration received by the Corporation
will be the Current Market Price thereof as
of the date of receipt. If any Junior Share,
Option or Convertible Security is issued in
connection with any merger in which the
Corporation is the surviving corporation, the
amount of consideration therefor will be
deemed to be the fair value of such
-16-
<PAGE>
portion of the net assets and business of the
non-surviving corporation as is attributable
to such Junior Shares, Options or Convertible
Securities, as the case may be. The fair
value of any consideration other than cash
and securities will be determined in good
faith by the Board of Directors of the
Corporation.
(vi) In case any Option is issued in connection
with the issue or sale of other securities of
the Corporation, together comprising one
integrated transaction in which no specific
consideration is allocated to such Option by
the parties thereto, the Option will be
deemed to have been issued without
consideration.
(vii) The number of Junior Shares outstanding at
any given time does not include shares owned
or held by or for the account of the
Corporation or any subsidiary, and the
disposition of any shares so owned or held
will be considered an issuance or sale of
Junior Shares.
(viii) If the Corporation takes a record of the
holders of Junior Shares (or any class
thereof) for the purpose of entitling them
(A) to receive a dividend or other
distribution payable in Junior Shares,
Options or in Convertible Securities or (B)
to subscribe for or purchase Junior Shares,
Options or Convertible Securities, then for
purposes of this Section 8 such record date
will be deemed to be the date of the issuance
or sale of the shares of Junior Stock deemed
to have been issued or sold upon the
declaration of such dividend or upon the
making of such other distribution or the date
of the granting of such right of subscription
or purchase, as the case may be.
(ix) Anything herein to the contrary
notwithstanding, no adjustment will be made
to the Conversion Price by reason of (A) the
issuance of securities of the Corporation
upon conversion of shares of Series B
Preferred Stock, and (B) the issuance of any
shares of the Corporation's capital stock to
employees and directors of the Corporation
pursuant to options and warrants granted to
such employees and directors upon the
approval of the Board of Directors of the
Corporation, (C) the issuance of any shares
of the Corporation's capital stock pursuant
to any employee plan, and (D) any issuances
pursuant to any of the Corporation's dividend
reinvestment plans.
(8) No adjustment in the Conversion Price shall be
required unless such adjustment would require a
cumulative increase or decrease of at least 1% in such
price; provided, however, that any adjustments that by
reason of this subsection (d)(8) are not required to be
made shall be carried forward and taken into account in
any subsequent adjustment until made; and provided,
further, that any adjustment shall be required and made
in accordance with the provisions of this Section 8
(other than this subsection (d)(8)) not later than such
time as may be required in order to preserve the tax-
free nature of a distribution to the holders of Common
Stock. Notwithstanding any other provisions of this
subsection (d), the Corporation shall not be required
to make any adjustment to the Conversion Price for the
issuance of any shares of Common Stock pursuant to any
plan providing for the reinvestment of distributions or
interest payable on securities of the Corporation and
the investment of additional optional amounts in shares
of Common Stock under such
-17-
<PAGE>
plan. All calculations under this Section 8 shall be
made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-tenth of a share (with
.05 of a share being rounded upward),as the case may
be.
(e) If:
(1) there shall be any reclassifications of the Common
Stock or any consolidation or merger to which the
Corporation is a party and for which approval of any
stockholders of the Corporation is required, or a
statutory share exchange involving the conversion or
exchange of Common Stock into securities or other
property, or a self tender offer by the Corporation for
all or substantially all of its outstanding Common
Stock, or the sale or transfer of all or substantially
all of the assets of the Corporation as an entity and
for which approval of any stockholder of the
Corporation is required; or
(2) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation;
then the Corporation shall cause to be filed with the Transfer
Agent and shall cause to be mailed to the holders of the Series B
Preferred Stock at their addresses as shown on the stock transfer
records of the Corporation, as promptly as possible, but at least
15 days prior to the applicable date hereinafter specified, a
notice stating the date on which such reclassification,
consolidation, merger, statutory share exchange, sale, transfer,
liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their
Common Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive such notice
or any defect therein shall not affect the legality or validity
of the proceedings described in this Section 8.
(f) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with the
Transfer Agent an officer's certificate setting forth the
Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment,
which certificate shall be conclusive evidence of the
correctness of such adjustment absent manifest error.
Promptly after delivery of such certificate, the Corporation
shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the
effective date on which such adjustment becomes effective
and shall mail such notice of such adjustment of the
Conversion Price to the holder of each share of Series B
Preferred Stock at such holder's last address as shown on
the share records of the Corporation.
(g) There shall be no adjustment of the Conversion Price in
case of the issuance of any shares of the Corporation in a
reorganization, acquisition or other similar transaction
except as specifically set forth in this Section 8. If any
action or transaction would require adjustment of the
Conversion Price pursuant to more than one subsection of
this Section 8, only one adjustment shall be made, and such
adjustment shall be the amount of adjustment that has the
highest absolute value.
(h) If the Corporation shall take any action affecting the
Common Stock, other than an action described in this Section
8, that would materially and adversely affect the conversion
rights of the holders of the Series B Preferred Stock, the
Conversion Price for the Series B Preferred Stock may be
reduced, to the extent permitted by law, in such manner, and
at such time, as the Board of Directors, in its reasonable
discretion, based in part upon advice of independent
financial and legal advisors, may determine in good faith to
be equitable in the circumstances.
-18-
<PAGE>
(i) The Corporation covenants that it will at all times reserve
and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock, for
the purpose of effecting conversion of the Series B
Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding Series B
Preferred Stock not theretofore converted. For purposes of
this subsection (i), the number of shares of Common Stock
that shall be deliverable upon the conversion of all
outstanding Series B Preferred Stock shall be computed as if
at the time of computation all such outstanding shares were
held by a single holder.
The Corporation covenants that any Common Stock issued upon
conversion or redemption of, or as a distribution in respect of,
the Series B Preferred Stock shall be validly issued, fully paid
and nonassessable. Before taking any action that would cause an
adjustment reducing the Conversion Price below the then par value
of the Common Stock deliverable upon conversion of the Series B
Preferred Stock, the Corporation will take any action that, in
the opinion of its counsel, may be necessary in order that the
Corporation may validly and legally issue fully paid and
nonassessable Common Stock at such adjusted Conversion Price.
The Corporation shall use its reasonable best efforts to list the
Common Stock required to be delivered upon conversion of, and any
Common Stock issued upon redemption or as a distribution in
respect of, the Series B Preferred Stock, prior to such delivery,
upon each national securities exchange, if any, upon which the
outstanding Common Stock are listed at the time of such delivery.
The Corporation shall take any action necessary to ensure that
any shares of Common Stock issued upon conversion or redemption
of, or as a distribution in respect of, shares of Series B
Preferred Stock are freely tradeable and not subject to any
resale restrictions under the Act, or any applicable state
securities or blue sky laws (other than any shares of Common
Stock which are held by an "affiliate" (as defined in Rule 144
under the Act).
(j) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the
issue or delivery of Common Stock or other securities or
property on conversion of the Series B Preferred Stock
pursuant hereto; provided, however, that the Corporation
shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of
Common Stock or other securities or property in a name other
than that of the holder of the Series B Preferred Stock to
be converted, and no such issue or delivery shall be made
unless and until the person requesting such issue or
delivery has paid to the Corporation the amount of any such
tax or has established, to the reasonable satisfaction of
the Corporation, that such tax has been paid.
In addition to the foregoing adjustments, the Corporation shall
be entitled to make such reductions in the Conversion Price, in
addition to those required herein, as it in its discretion
considers to be advisable in order that any share distributions,
subdivisions of shares, reclassification or combination of
shares, distribution of rights, options, warrants to purchase
shares or securities, or a distribution of other assets (other
than cash distributions) will not be taxable or, if that is not
possible, to diminish any income taxes that are otherwise payable
because of such event.
(k) In no event shall a Series B Holder be permitted to convert
shares of Series B Preferred Stock to the extent such
conversion would result in such Series B Holder beneficially
owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules thereunder) more than 4.999%
of the then issued and outstanding shares of Common Stock,
including shares issuable upon conversion of Series B
Preferred Stock held by such Series B Holder after
application of this paragraph. The provisions of this
paragraph may be waived by a Series B Holder (but only as to
itself) upon not less than 75 days' prior notice to the
Corporation, and the provisions of this paragraph shall
continue to apply until such 75th day (or later, if stated
in the notice of waiver). Each Series B Holder shall have
the sole authority and obligation to determine whether the
restriction contained in this Section
-19-
<PAGE>
applies, and each conversion by a Series B Holder shall be
deemed to be accompanied by the representation that such
conversion is in accordance with the provisions of this
paragraph. No conversion in violation of this paragraph but
otherwise in accordance with the Charter shall affect the
status of the securities issued upon such conversion as
validly issued, fully paid and nonassessable.
Section 9. Ownership and Transfer Limitations.
(a) REIT-Related Restrictions. The Ownership and transfer of
the Series B Preferred Stock shall be restricted as provided
in the Charter.
(b) ERISA-Related Restrictions. No Benefit Plan Investor may
acquire Series B Preferred Stock without the Corporation's
prior written consent (which consent may be withheld in the
Corporation's sole and absolute discretion). Prior to the
Series B Preferred Stock qualifying as a "publicly-offered
security" or the availability of another exception to the
"look-through" rule (i.e., the provisions of paragraph
(a)(2) of the Plan Asset Regulation), transfers of Series B
Preferred Stock to Benefit Plan Investors that would
increase aggregate Benefit Plan Investor ownership of the
Series B Preferred Stock above the 25% Threshold will be
void ab initio. In addition, in the event that the aggregate
number of Series B Preferred Stock owned by Benefit Plan
Investors, but for the operation of this sentence, would
meet or exceed the 25% Threshold, (1) the Series B Preferred
Stock held by Benefit Plan Investors shall be deemed to be
Shares-in-Trust, pro-rata, to the extent necessary to reduce
aggregate Benefit Plan Investor ownership of the Series B
Preferred Stock below the 25% Threshold, and (2) such number
of Series B Preferred Stock (rounded up, in the case of each
holder, to the nearest whole share) shall be transferred
automatically and by operation of law to the Trust (as
described in Article VII of the Charter) to be held in
accordance with this subsection (b) of Section 9 and
otherwise in accordance with Article VII, of the Charter and
(3) the Benefit Plan Investors previously owning such
Shares-in-Trust shall submit such number of Series B
Preferred Stock for registration in the name of the Trust.
Such transfer to a Trust and the designation of Series B
Preferred Stock as Shares-in-Trust shall be effective as of
the close of business on the business day prior to the date
of the event that otherwise would have caused aggregate
Benefit Plan Investor ownership of Series B Preferred Stock
to meet or exceed the 25% Threshold.
Prior to the discovery of the existence of the Trust, any
transfer of Series B Preferred Stock by a Benefit Plan Investor
to a non-Benefit Plan Investor shall reduce the number of Shares-
in-Trust on a one-for-one basis, and to that extent such shares
shall cease to be designated as Shares-in-Trust and shall be
returned, effective at exactly the time of the transfer to the
non-Benefit Plan Investor, automatically and without further
action by the Corporation or the Benefit Plan Investor, to all
Benefit Plan Investors (or the transferee, if applicable) pro
rata in accordance with the Benefit Plan Investors' prior
holdings. After the discovery of the existence of the Trust, but
prior to the redemption of all discovered Shares-in-Trust and/or
the submission of all discovered Shares-in-Trust for registration
in the name of the Trust, any transfer of Series B Preferred
Stock by a Benefit Plan Investor to a non-Benefit Plan Investor
shall reduce the number of Shares-in-Trust on a one-for-one
basis, and to that extent such shares shall cease to be
designated as Shares-in-Trust and shall be returned,
automatically without further action by the Corporation or the
Benefit Plan Investor, to the transferring Benefit Plan Investor
(or its transferee, if applicable).
In the event that any shares of Series B Preferred Stock are
deemed "Shares-in-Trust" pursuant to this subsection (b) of
Section 9, the holder shall cease to own any right or interest
with respect to such shares and the Corporation will have the
right to redeem such Shares-in-Trust for an amount equal to their
Fair Market Value, which proceeds shall be payable to the
purported owner. This subsection (b) of Section 9 shall cease to
apply and all Shares-in-Trust shall cease to be designated as
Shares-in-Trust and shall be returned, automatically and by
operation of law, to their purported owners, all of which shall
occur at such time as the Series B Preferred Stock qualify as a
publicly
-20-
<PAGE>
offered security or if another exception to the "look-through"
rule under the Plan Asset Regulation applies..
SECOND: The Shares have been reclassified by the Board of Directors
------
pursuant to Article VI of the Charter.
THIRD: These Articles Supplementary have been approved by the Board of
-----
Directors in the manner and by the vote required by law.
-21-
<PAGE>
FOURTH: The undersigned Secretary of the Corporation acknowledges these
------
Articles Supplementary to be the corporate act of the Corporation and, as to all
matters or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary
to be signed in its name and on its behalf by its President and attested to by
its Secretary on this 21st day of December, 1998.
ATTEST:
/s/ Ronald Morrison By: /s/ William Ashmore (SEAL)
- ------------------------------ ----------------------------
Ronald Morrison William Ashmore
Secretary President
-22-
<PAGE>
EXHIBIT 4.9
SERIES B 10.5% CUMULATIVE SERIES B 10.5% CUMULATIVE
CONVERTIBLE PREFERRED STOCK CONVERTIBLE PREFERRED STOCK
NUMBER [LOGO OF IMPAC APPEARS HERE] SHARES
TRANSFERABLE IN THE CITIES OF BOSTON, MASSACHUSETTS AND NEW YORK, NEW YORK
CUSIP 45254P 20 1
INCORPORATED UNDER THE LAWS
OF THE STATE OF MARYLAND SEE REVERSE FOR CERTAIN DEFINITIONS
This certifies that
is the record holder of
FULLY PAID AND NON-ASSESSABLE SHARES OF SERIES B 10.5% CUMULATIVE CONVERTIBLE
PREFERRED STOCK, $.01 PAR VALUE PER SHARE, OF
================== IMPAC MORTGAGE HOLDINGS, INC. ==================
(the "Corporation") transferable on the books of the Corporation by the holder
hereof in person or its duly authorized attorney, upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are issued and shall be held subject to all of the provisions of the
charter of the Corporation (the "Charter") and the Bylaws of the Corporation and
any amendments thereto. This Certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar. In Witness Whereof, the
Corporation has caused this Certificate to be executed on its behalf by its duly
authorized officers.
DATED:
Countersigned and Registered.
THE FIRST NATIONAL BANK OF BOSTON
(Canton, Massachusetts)
Transfer Agent and registrar
By: [SIGNATURE ILLEGIBLE] /s/ Ron Morrison [SIGNATURE ILLEGIBLE]
[SEAL APPEARS HERE]
AUTHORIZED SIGNATURE SECRETARY CHAIRMAN OF THE BOARD
<PAGE>
IMPAC MORTGAGE HOLDINGS, INC.
This Certificate and the shares represented hereby are issued and shall be
held subject to all of the provisions of the charter of the Corporation (the
"Charter") and the Bylaws of the Corporation and any amendments thereto, by all
of which the holder by acceptance hereof is bound.
The Corporation will furnish to any stockholder, on request and without
charge, a full statement of the information required by Section 2.211(b) of the
Corporations and Associations Article of the Annotated Code of Maryland with
respect to the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of redemption of the
stock of each class which the Corporation has authority to issue and, if the
Corporation is authorized to issue any preferred or special class in series, (i)
the differences in the relative rights and preferences between the shares of
each series to the extent set, and (ii) the authority of the Board of Directors
to set such rights and preferences to subsequent series. The foregoing summary
does not purport to be complete and is subject to and qualified in its entirety
by reference to the Charter, a copy of which will be sent without charge to each
stockholder who so requests. Such request must be made to the Secretary of the
Corporation at its principal office or to the Transfer Agent.
The shares requested by this certificate are subject to restrictions on
Beneficial and Constructive Ownership and Transfer for the purpose of the
Corporation's maintenance of its status as a Real Estate investment Trust under
the Internal Revenue Code of 1986, as amended (the "Code"). Subject to certain
further restrictions and except as expressly provided in the Charter, (i) no
Person may Beneficially or Constructively Own shares of the Corporation's Common
Stock in excess of 9.5 percent (in value or number of shares) of the outstanding
shares of Common Stock of the Corporation, unless such Person is an Excepted
Holder (in which case the Excepted Holder Limit shall be applicable); (ii) no
Person may Beneficially or Constructively Own shares of Capital Stock of the
Corporation unless such Person is an Excepted Holder (in which case the Excepted
Holder Unit shall be applicable); (ii) no Person may Beneficially or
Constructively Own shares of Capital Stock of the Corporation in excess of 9.5
percent of the value of the total outstanding shares of Capital Stock of the
Corporation, unless such Person is an Excepted Holder (in which case the
Excepted Holder Limit shall be applicable); (iii) no Person may Beneficially or
Constructively Own Capital Stock that would result in the Corporation being
"closely held" under Section 856(h) of the Code or otherwise cause the
Corporation to fail to qualify as a REIT, and (iv) no Person may Transfer shares
of Capital Stock if such transfer would result in the Capital Stock of the
Corporation being owned by fewer than 100 Persons. Any Person who Beneficially
or Constructively Owns or attempts to Beneficially or Constructively Own shares
of Capital Stock which causes or will cause a Person to Beneficially or
Constructively Own Shares of Capital Stock in excess or in violation of the
above limitations must immediately notify the Corporation. If any of the
restrictions on transfer or ownership are violated, the shares of Capital Stock
represented hereby will be automatically transferred to a Trustee of a trust for
the benefit of one or more Charitable Beneficiaries. In addition, upon the
occurrence of certain events, attempted Transfers in violation of the
restrictions described above may be void ab initio. All capitalized terms in
this legend have the meanings defined in the Charter, as the same may be amended
from time to time, a copy of which, including the restrictions on transfer and
ownership, will be furnished to each holder of Capital Stock of the Corporation
on request and without charge.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR DESTROYED,
THE CORPORATION MAY REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE
ISSUANCE OF A REPLACEMENT CERTIFICATE.
NOTICE OF ELECTION TO CONVERT
(CONVERTIBLE INTO COMMON STOCK)
The undersigned hereby irrevocably elects to convert
________________________________________________________________________ shares
of Series B 10.5% Cumulative Convertible Preferred Stock represented by the
within certificate into shares of Common Stock of Impac Mortgage Holdings, Inc.
(as such shares may be constituted on the conversion date) in accordance with
the provisions of the Charter, as amended.
Dated ____________________
______________________________________
Signature
<PAGE>
[FOR CONVERSION USE ONLY]
the provisions of the Charter, as amended.
Dated ______________________
_________________________________
Signature
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were when lien cut in full
according to applicable laws or regulations.
TEN COM - as tenants in common
UNIF GIFT MIN ACT - _________ CUSTODIAN _______
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors Act
_________________________________
JT TEN - as joint tenants with right (State)
of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
For Value Received hereby sells, assigns and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
INDENTIFYING NUMBER OF TRANSFEREE
- --------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------- Shares
of Series B 10.5% Cumulative Convertible Refund Stock $.01 par value per share
of the Corporation represented by the within Certificate and do hereby
irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said shares of Series B 10.5% Cumulative Convertible Refund
Stock on the books of the Corporation with full power of substitution in the
premises.
Dated: _____________________ __________________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE OF THE CERTIFICATE IN
EVERY PARTICULAR WITHOUT ALTERNATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED
By ___________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (Banks,
Stockbrokers, Savings and Loan Associations
and Credit Unions) WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
EXHIBIT 12.2
IMPACT MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
(dollar amounts in thousands)
Computation of ratio of earnings to fixed charges and preferred stock dividends
(including CMO debt):
<TABLE>
<CAPTION>
For the nine months
ended September 30, For the year ended December 31,
---------------------- ----------------------------------------------------------------
Pro forma 1998 Pro forma 1997 1996 1995 1994 1993
--------- ---- --------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed charges $128,462 $128,482 $118,332 $118,332 $75,954 $3,552 $ 762 $ 533
Preferred stock dividends 2,363 - 3,150 - - - - -
-------- -------- -------- -------- ------- ------ ------ ------
Combined fixed charges and
preferred stock dividends 130,845 128,482 121,482 118,332 75,954 3,552 762 533
Net earnings 2,130 2,130 (16,029) (16,029) 11,879 2,134 460 4,747
Preferred stock dividends (2,363) - (3,150) - - - - -
-------- -------- -------- -------- ------- ------ ------ ------
Total $130,612 $130,612 $102,303 $102,303 $87,833 $5,666 $1,222 $5,280
======== ======== ======== ======== ======= ====== ====== ======
Ratio of earnings to fixed charges
and preferred stock dividends 1.0x 1.0x 0.8x 0.9x 1.2x 1.6x 1.6x 9.9x
======== ======== ======== ======== ======= ====== ====== ======
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Impac Mortgage Holdings, Inc.:
We consent to the use of our report dated February 9, 1998, incorporated herein
by reference and to the reference to our firm under the heading "Experts" in the
Prospectus.
KPMG Peat Marwick LLP
Orange County, California
December 22, 1998
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Impac Funding Corporation:
We consent to the use of our report dated February 9, 1998, incorporated herein
by reference and to the reference to our firm under the heading "Experts" in the
Prospectus.
KPMG Peat Marwick LLP
Orange County, California
December 22, 1998
