SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): June 26, 1995
RESOURCE MORTGAGE CAPITAL, INC.
(Exact Name of Registrant as Specified in Charter)
Virginia
1-9819 52-1549373
(State or Other (Commission File Number)
(IRS Employer
Jurisdiction of
Identification No.)
Incorporation)
2800 East Parham Road, Richmond, Virginia
23228
(Address of Principal Executive
Offices) (Zip Code)
Registrant's telephone number, including area code: (804) 967-5800
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
This filing is made to effect the incorporation by reference
of the accompanying exhibits in the Company's Registration
Statement No. 33-50705 on Form S-3, filed with the Securities and
Exchange Commission, which became effective on January 28, 1994,
to supply information omitted from Item 14 of the above described
Registration Statement (Attached as Annex A), and to include a
press release in connection with the offering of Series A
Cumulative Convertible Preferred Stock of the Company (Attached as
Annex B).
Item 7. Exhibits.
(c). Exhibits.
1.1 Underwriting Agreement.
4.1 Form of Amendment to Articles of Incorporation.
4.2 Form of Certificate for the Series A Cumulative Convertible
Preferred Stock.
5.1 Legal Opinion of Venable, Baetjer and Howard, LLP.
8.1 Tax Opinion of Venable, Baetjer and Howard, LLP.
12.1 Ratio of Available Earnings to Fixed Charges.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Venable, Baetjer and Howard, LLP (contained in
Exhibits 5.1 and 8.1 filed herewith).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto duly
authorized.
RESOURCE MORTGAGE CAPITAL, INC.
June 26, 1995 By: /s/ LYNN K. GEURIN
Lynn K. Geurin
Executive Vice President
<PAGE>
ANNEX A
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses, other than underwriting discounts and
commissions, in connection with the offering of Securities are:
<TABLE>
<CAPTION>
<S> <C>
Registration Fee $62,50
0
Legal Fees and Expenses 100,00
0
Accounting Fees and Expenses 20,000
Blue Sky Qualification and Expenses 6,200
including Counsel Fees
New York Stock Exchange Listing Fee 1,500
Nasdaq/NMS Entry and Listing Fees 13,000
NASD Fee 20,000
Printing and Engraving Expenses 16,000
Transfer and Registrar Fees 7,500
Miscellaneous 3,300
TOTAL 250,00
0
</TABLE>
<PAGE>
ANNEX B
PRESS RELEASE
FOR IMMEDIATE RELEASE CONTACT: ANDREA GARRETT
June 26, 1995
(804)967-5800
RESOURCE MORTGAGE CAPITAL ANNOUNCES
PREFERRED STOCK OFFERING
Resource Mortgage Capital, Inc. (NYSE: RMR) today announced
the public offering of 1,350,000 shares of the Company's Series A
Cumulative Convertible Preferred Stock at an offering price of
$24.00 per share in an underwritten offering managed by Stifel,
Nicolaus & Company, Incorporated. The Company has also granted
the underwriters an option to purchase up to 202,500 additional
shares of preferred stock to cover over-allotments, if necessary.
It is expected the purchase by the underwriters of such shares
will close on June 30, 1995. A copy of the prospectus may be
obtained from Stifel, Nicolaus.
The Series A Cumulative Convertible Preferred Stock will be
convertible into Resource Mortgage common stock at a conversion
price of $24.00 per share (initially equal to a one for one
conversion ratio). The quarterly dividend rate will be $0.585 per
share.
This release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sales of
these securities in any state in which such offer, solicitation or
sales would be unlawful prior to registration or qualification
under the securities laws of any such state.
Resource Mortgage Capital, Inc. is a self-managed real estate
investment trust that originates, services, securitizes and
invests in residential mortgage loans and securities. The
Company's strategy is to grow its net margin income and to use its
mortgage operations to create investments for its portfolio.
<PAGE>
EXHIBIT INDEX
Exhibit Page
1.1 Underwriting Agreement. 7
4.1 Form of Amendment to Articles of Incorporation. 30
4.2 Form of Certificate for the Series A Cumulative Convertible
Preferred Stock. 52
5.1 Legal Opinion of Venable, Baetjer and Howard, LLP. 54
8.1 Tax Opinion of Venable, Baetjer and Howard, LLP. 56
12.1 Ratio of Available Earnings to Fixed Charges. 64
23.1 Consent of KPMG Peat Marwick LLP. 65
23.2 Consent of Venable, Baetjer and Howard, LLP (contained in
Exhibits 5.1 and 8.1 filed herewith).
<PAGE>
EXHIBIT 1.1
RESOURCE MORTGAGE CAPITAL, INC.
Underwriting Agreement
St. Louis, Missouri
June 26, 1995
TO: STIFEL, NICOLAUS & COMPANY,
INCORPORATED, Representative
of the Underwriters named in
Schedule I hereto
Dear Sirs:
Resource Mortgage Capital, Inc., a Virginia corporation
(the "Company"), proposes to sell to the underwriters named
in Schedule I hereto (the "Underwriters"), for whom you (the
"Representative") are acting as representative, shares of
Series A Cumulative Convertible Preferred Stock, $.01 par
value, of the Company (the "Stock"). The number of shares
of the Stock that will be purchased by the Underwriters is
set forth in Schedule I hereto (the "Firm Stock").
The Company also grants to the Underwriters an option
to purchase additional shares of the Stock (the "Option
Stock", and, together with the Firm Stock, herein called the
"Preferred Stock"). Such option is granted solely for the
purpose of covering over-allotments in the sale of the Firm
Stock and is exercisable as provided in Section 3 hereof.
Shares of the Option Stock shall be purchased severally for
the account of the Underwriters in proportion to the number
of shares of Firm Stock set opposite the name of such
Underwriters in Schedule I hereto and on the terms and
conditions contained therein and in this Agreement. The
price of both the Firm Stock and any Option Stock shall be
$22.98 per share. Upon authorization by the Representative
of the release of the Firm Stock and, if applicable, the
Option Stock, the several Underwriters propose to offer the
Firm Stock and, if applicable, the Option Stock for sale
upon the terms and conditions set forth in the Final
Prospectus.
1. Representations and Warranties. The Company
represents and warrants to, and agrees with, each
Underwriter as set forth below in this Section 1. Certain
terms used in this Section 1 are defined in paragraph (c)
hereof.
<PAGE>
(a) The Company meets the requirements
for use of Form S-3 under the Securities Act of
1933, as amended (the "Act") and has filed with
the Securities and Exchange Commission (the
"Commission") Registration Statement No. 33-50705,
on such Form, including a Basic Prospectus, for
registration under the Act of the offering and
sale of securities, including the Preferred Stock.
The Company may have filed one or more amendments
thereto, and may have used a Preliminary Final
Prospectus, each of which has previously been
furnished to you. Such registration statement, as
so amended, has become effective. The offering of
the Preferred Stock is a delayed offering and,
although the Basic Prospectus may not include all
the information with respect to the Preferred
Stock and the offering thereof required by the Act
and the rules thereunder to be included in the
Final Prospectus, the Basic Prospectus includes
all such information required by the Act and the
rules thereunder to be included therein as of the
Effective Date. The Company will next file with
the Commission pursuant to Rules 415 and 424(b)(2)
or (5) a final supplement to the form of
prospectus included in such registration statement
relating to the Preferred Stock and the offering
thereof. As filed, such Final Prospectus
Supplement shall include all required information
with respect to the Preferred Stock and the
offering thereof and, except to the extent the
Representative shall agree in writing to a
modification, shall be in all substantive respects
in the form furnished to you prior to the
Execution Time or, to the extent not completed at
the Execution Time, shall contain only such
specific additional information and other changes
(beyond that contained in the Basic Prospectus and
any Preliminary Final Prospectus) as the Company
has advised you, prior to the Execution Time, will
be included or made therein or to which you have
agreed.
(b) On the Effective Date, the
Registration Statement did, and when the Final
Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing
Date (as hereinafter defined) and the Second
Closing Date (as hereinafter defined), the Final
Prospectus (and any supplement thereto) will,
comply in all material respects with the
applicable requirements of the Act and the
Securities Exchange Act of 1934 (the "Exchange
Act") and the respective rules thereunder; on the
Effective Date, the Registration Statement did not
or will not contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary in
order to make the statements therein not
misleading; and, on the date of any filing
<PAGE>
pursuant to Rule 424(b), the Closing Date and
the Second Closing Date, the Final Prospectus
(together with any supplement thereto) will not,
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; provided, however, that the Company
makes no representations or warranties as to the
information contained in or omitted from the
Registration Statement or the Final Prospectus (or
any supplement thereto) in reliance upon and in
conformity with information furnished in writing
to the Company by or on behalf of any Underwriter
through the Representative specifically for
inclusion in the Registration Statement or the
Final Prospectus (or any supplement thereto).
(c) The terms which follow, when used
in this Agreement, shall have the meanings
indicated. The term the "Effective Date" shall
mean each date that the Registration Statement and
any post-effective amendment or amendments thereto
became or become effective. "Execution Time"
shall mean the date and time that this Agreement
is executed and delivered by the parties hereto.
"Basic Prospectus" shall mean the prospectus
referred to in paragraph (a) above contained in
the Registration Statement at the Effective Date.
"Preliminary Final Prospectus" shall mean any
preliminary prospectus supplement to the Basic
Prospectus which describes the Preferred Stock and
the offering thereof and is used prior to filing
of the Final Prospectus. "Final Prospectus" shall
mean the prospectus supplement relating to the
Preferred Stock that is first filed pursuant to
Rule 424(b) after the Execution Time, together
with the Basic Prospectus. "Registration
Statement" shall mean the registration statement
referred to in paragraph (a) above, including
incorporated documents, exhibits and financial
statements, as amended at the Execution Time (or,
if not effective at the Execution Time), in the
form in which it shall become effective and, in
the event any post-effective amendment thereto
becomes effective prior to the Closing Date, shall
also mean such registration statement as so
amended. Such term shall include any Rule 430A
Information deemed to be included therein at the
Effective Date as provided by Rule 430A. "Rule
415," "Rule 424," "Rule 430A" and "Regulation S-K"
refer to such rules or regulation under the Act.
"Rule 430A Information" means information with
respect to the Preferred Stock and the offering
thereof permitted to omitted from the Registration
Statement when it becomes effective pursuant to
Rule 430A. Any reference herein to the
Registration
<PAGE>
Statement, the Basic Prospectus, any
Preliminary Final Prospectus or the Final
Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed
under the Exchange Act on or before the Effective
Date of the Registration Statement or the issue
date of the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus, as the
case may be; and any reference herein to the terms
"amend," "amendment" or "supplement" with respect
to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or
the Final Prospectus shall be deemed to refer to
and include the filing of any document under the
Exchange Act after the Effective Date of the
Registration Statement or the issue date of the
Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus, as the case may be,
deemed to be incorporated therein by reference.
2. Purchase and Sale. Subject to the terms and
conditions and in reliance upon the representations and
warranties herein set forth, the Company agrees to sell to
each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the purchase
price per share, the number of shares of Preferred Stock set
forth opposite such Underwriter's name in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for
the Preferred Stock shall be made on the date and at the
time specified in Schedule I hereto, which date and time may
be postponed by agreement between the Representative and the
Company or as provided in Section 8 hereof. The date and
time of delivery and payment for the Firm Stock shall be
referred to herein as the "Closing Date," and the date and
time of delivery and payment for the Option Stock shall be
referred to herein as the "Second Closing Date." Delivery
of the Preferred Stock shall be made to the Representative
for the respective accounts of the several Underwriters
against payment by the several Underwriters through the
Representative of the purchase price thereof to or upon the
order of the Company payable in same day funds. Delivery of
the Firm Stock and the Option Stock, as the case may be,
shall be made at such location as the Representative shall
reasonably designate at least one business day in advance of
the Closing Date and the Second Closing Date, respectively,
and payment for the Preferred Stock shall be made at the
office specified in Schedule I hereto. Certificates for the
Firm Stock shall be registered in such names and in such
denominations as the Representative may request not less
than three full business days in advance of the Closing
Date. Certificates for the Option Stock shall be registered
in such names and in such denominations as provided below.
<PAGE>
The Company agrees to have the certificates for each of
the Firm Stock and the Option Stock available for
inspection, checking and packaging by the Representative in
New York, New York, not later than 1:00 P.M. on the business
day prior to the Closing Date and the Second Closing Date,
respectively.
The option granted in the preamble hereof may be
exercised at any time, in whole or in part but only once, on
or before the thirtieth day after the date of this Agreement
by written notice being given to the Company by the
Underwriters. Such notice shall set forth the aggregate
number of shares of Option Stock as to which the option is
being exercised, the names in which the shares of the Option
Stock are to be registered, the denominations in which the
shares of the Option Stock are to be issued and the date and
time, as determined by the Underwriters, when the shares of
the Option Stock are to be delivered; provided, however,
that this date and time shall not be earlier than the
Closing Date nor earlier than the second business day after
the date on which the option shall have been exercised nor
later than the third business day after the date on which
the option shall have been exercised. If the option is
exercised two business days prior to the Closing Date, then
the Second Closing Date shall be the same as the Closing
Date.
4. Agreements. The Company agrees with the several
Underwriters that:
(a) The Company will use its best
efforts to cause any amendment to the Registration
Statement, to become effective that may in its
judgment be required by the Act. Prior to the
termination of the offering of the Preferred
Stock, the Company will not file any amendment of
the Registration Statement or supplement
(including the Final Prospectus or any Preliminary
Final Prospectus) to the Basic Prospectus unless
the Company has furnished you a copy for your
review prior to filing and will not file any such
proposed amendment or supplement to which you
reasonably object. Subject to the foregoing
sentence, the Company will cause the Final
Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant
to the applicable paragraph of Rule 424(b) within
the time period prescribed and will provide
evidence satisfactory to the Representative of
such timely filing. The Company will promptly
advise the Representative (i) when any amendment
to the Registration Statement shall have been
filed and become effective, (ii) when the Final
Prospectus shall have been filed with the
Commission pursuant to Rule 424(b), (iii) of any
request by the Commission for any amendment of the
Registration Statement or supplement to the Final
Prospectus or
<PAGE>
for any additional information, (iv) of the
issuance by the Commission of any stop order
suspending the effectiveness of the Registration
Statement or the institution or threatening of any
proceeding for that purpose and (v) of the receipt
by the Company of any notification with respect to
the suspension of the qualification of the
Preferred Stock for sale in any jurisdiction or
the initiation or threatening of any proceeding
for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus
relating to the Preferred Stock is required to be
delivered under the Act, any event occurs as a
result of which the Final Prospectus as then
supplemented would include any untrue statement of
a material fact or omit to state any material fact
necessary to make the statements therein in the
light of the circumstances under which they were
made not misleading, or if it shall be necessary
to amend the Registration Statement or supplement
the Final Prospectus to comply with the Act or the
Exchange Act or the respective rules thereunder,
the Company promptly will prepare and file with
the Commission, subject to the second sentence of
paragraph (a) of this Section 4, an amendment or
supplement which will correct such statement or
omission or effect such compliance.
(c) As soon as practicable, the Company
will make generally available to its security
holders and to the Representative an earnings
statement or statements of the Company and its
subsidiaries which will satisfy the provisions of
Section 11(a) of the Act and Rule 158 under the
Act.
(d) The Company will furnish to the
Representative and counsel for the Underwriters,
without charge, copies of the Registration
Statement (including exhibits thereto) and, so
long as delivery of a prospectus by an Underwriter
or dealer may be required by the Act, as many
copies of any Preliminary Final Prospectus and the
Final Prospectus and any supplement thereto as the
Representative may reasonably request. The
Company will pay the expenses of printing or other
production of all documents relating to the
offering.
<PAGE>
(e) The Company will arrange for the
qualification of the Preferred Stock for sale
under the laws of such jurisdictions as the
Representative may designate and will maintain
such qualifications in effect so long as required
for the distribution of the Preferred Stock and
will pay the fee of the National Association of
Securities Dealers, Inc., in connection with its
review of the offering.
(f) Until the date 30 days from the
Closing Date, the Company will not, without the
prior written consent of the Representative,
offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce
the offering of, any other shares of Common Stock
or any securities convertible into, or
exchangeable for, shares of Common Stock;
provided, however, that the Company may issue and
sell Common Stock pursuant to any employee stock
option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the
Execution Time and the Company may issue Common
Stock issuable upon the conversion of securities
or the exercise of warrants outstanding at the
Execution Time.
5. Conditions to the Obligations of the Underwriters.
The obligations of the Underwriters to purchase each of the
Firm Stock or the Option Stock, as the case may be, shall be
subject to the accuracy of the representations and
warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date or the Second Closing
Date, as the case may be, to the accuracy of the statements
of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional
conditions:
(a) If filing of the Final Prospectus,
or any supplement thereto, is required pursuant to
Rule 424(b), the Final Prospectus, and any such
supplement, shall have been filed in the manner
and within the time period required by Rule
424(b); and no stop order suspending the
effectiveness of the Registration Statement shall
have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Company shall have furnished to
the Representative the written opinion of Venable,
Baetjer and Howard, LLP, counsel for the Company,
dated the Closing Date, in form reasonably
satisfactory to the Representative and counsel for
the Underwriters, which opinion shall be confirmed
by a subsequent
<PAGE>
opinion, dated the Second Closing Date, to
the extent applicable, in the event of the Second
Closing Date, to the effect that:
(i) each of the Company,
Resource Finance Company, and Merit
Securities Corp. (individually a "Subsidiary"
and collectively the "Subsidiaries") and SMFC
Holding Inc., Saxon Mortgage Management
Corp., SMFC Funding Corporation, and Saxon
Mortgage, Inc. (individually an "Affiliate"
and collectively the "Affiliates") has been
duly incorporated and is validly existing as
a corporation in good standing under the laws
of the jurisdiction in which it is chartered
or organized, with full corporate power and
authority to own its properties and conduct
its business as described in the Final
Prospectus, and is duly qualified to do
business as a foreign corporation and is in
good standing under the laws of each
jurisdiction which requires such
qualification wherein it owns or leases
material properties or conducts material
business;
(ii) all the outstanding
shares of capital stock of each Subsidiary
and each Affiliate have been duly and validly
authorized and issued and are fully paid and
nonassessable, and, except as otherwise set
forth in the Final Prospectus, all
outstanding shares of capital stock of the
Subsidiaries are owned by the Company either
directly or through wholly owned subsidiaries
free and clear of any perfected security
interest and, to the knowledge of such
counsel, after due inquiry, any other
security interests, claims, liens or
encumbrances;
(iii) the Company's
authorized equity capitalization is as set
forth in the Final Prospectus; the capital
stock of the Company conforms to the
description thereof contained in the Final
Prospectus; the Preferred Stock has been duly
and validly authorized, and, when issued and
delivered to and paid for by the Underwriters
pursuant to this Agreement, will be full paid
and nonassessable; the shares of underlying
Common Stock into which the Preferred Stock
is convertible have been duly and validly
authorized and reserved for issuance on
conversion of the Preferred Stock; the
Preferred Stock is duly authorized for
listing, subject to official notice of
issuance, on the National Association of
Securities Dealers' NASDAQ National Market
System; the certificates for the
<PAGE>
Preferred Stock are in valid and
sufficient form; and the holders of
outstanding shares of capital stock of the
Company are not entitled to preemptive or
other rights to subscribe for the Preferred
Stock or the underlying Common Stock;
(iv) to the best knowledge of
such counsel, there is no pending or
threatened action, suit or proceeding before
any court or governmental agency, authority
or body or any arbitrator involving the
Company or any of its Subsidiaries or
Affiliates, of a character required to be
disclosed in the Registration Statement which
is not adequately disclosed in the Final
Prospectus, and there is no franchise,
contract or other document of a character
required to be described in the Registration
Statement or Final Prospectus, or to be filed
as required; and the statements included or
incorporated in the Final Prospectus
describing any legal proceedings or material
contracts or agreements relating to the
Company fairly summarize such matters;
(v) the Registration
Statement has become effective under the Act;
any required filing of the Basic Prospectus,
any Preliminary Final Prospectus and the
Final Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been
made in the manner and within the time period
required by Rule 424(b); to the best
knowledge of such counsel, no stop order
suspending the effectiveness of the
Registration Statement has been issued, no
proceedings for that purpose have been
instituted or threatened, and the
Registration Statement and the Final
Prospectus (other than the financial
statements and other financial and
statistical data as to which such counsel
need express no opinion) comply as to form in
all material respects with the applicable
requirements of the Act and the Exchange Act
and the respective rules thereunder; and such
counsel has no reason to believe without
independent verification that at the
Effective Date the Registration Statement
contained any untrue statement of a material
fact or omitted to state any material fact
required to be stated therein or necessary to
make the statements therein not misleading or
that the Final Prospectus includes any untrue
statement of a material fact or omits to
state a material fact necessary to make the
<PAGE>
statements therein, in the light of
the circumstances under which they were made,
not misleading;
(vi) this Agreement has been
duly authorized, executed and delivered by
the Company;
(vii) no consent, approval,
authorization or order of any court or
governmental agency or body is required for
the consummation of the transactions
contemplated herein, except such as have been
obtained under the Act and such as may be
required under the blue sky laws of any
jurisdiction in connection with the purchase
and distribution of the Preferred Stock by
the Underwriters and such other approvals
(specified in such opinion) as have been
obtained;
(viii) neither the issue and
sale of the Preferred Stock, nor the
consummation of any other of the transactions
herein contemplated nor the fulfillment of
the terms hereof will conflict with, result
in a breach or violation of, or constitute a
default under any law or the charter or by-
laws of the Company or the terms of any
material indenture or other agreement or
instrument known to such counsel and to which
the Company or any of its Subsidiaries or
Affiliates is a party or bound or any
judgment, order or decree known to such
counsel to be applicable to the Company or
any of its Subsidiaries or Affiliates of any
court, regulatory body, administrative
agency, governmental body or arbitrator
having jurisdiction over the Company or any
of its Subsidiaries or Affiliates;
(ix) Meritech Mortgage
Services, Inc., an affiliate of the Company
("Meritech") is in good standing under the
laws of Texas;
(x) all the outstanding
shares of capital stock of Meritech is owned
of record and to our knowledge beneficially
by SMFC Funding Corporation;
(xi) to the best knowledge of
such counsel, there is no pending or
threatened action, suit or proceeding before
any court or governmental agency, authority
or body or any arbitrator involving the
Meritech, of a character required to be
disclosed in the Registration Statement which
is not
<PAGE>
adequately disclosed in the Final
Prospectus, and there is no franchise,
contract or other document of a character
required to be described in the Registration
Statement or Final Prospectus, or to be filed
as required; and the statements included or
incorporated in the Final Prospectus
describing any legal proceedings or material
contracts or agreements relating to the
Company fairly summarize such matters;
(xii) neither the issue and
sale of the Preferred Stock, nor the
consummation of any other of the transactions
herein contemplated nor the fulfillment of
the terms hereof will conflict with, result
in a breach or violation of, or constitute a
default under any law or the charter or by-
laws of Meritech or the terms of any material
indenture or other agreement or instrument
known to such counsel and to which Meritech
is a party or bound or any judgment, order or
decree known to such counsel to be applicable
to Meritech of any court, regulatory body,
administrative agency, governmental body or
arbitrator having jurisdiction over Meritech;
(xiii) no holders of
securities of the Company have rights to the
registration of such securities under the
Registration Statement;
(xiv) the Company is not an
"investment company" within the meaning of
the Investment Company Act of 1940; and
(xv) the statements contained
under "Federal Income Tax Considerations" in
the Basic Prospectus, insofar as they
describe Federal statutes, rules and
regulations, constitute a fair summary
thereof.
In rendering such opinion, such counsel may rely as to
matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and
public officials and, with respect to item (ix) only, on
representations of the sellers of Meritech to the Company in
the Stock Purchase Agreement dated September 30, 1994.
References to the Final Prospectus in this paragraph (b)
include any supplements thereto at the Closing Date or the
Second Closing Date, as the case may be.
<PAGE>
(c) The Representative shall have
received from Thompson & Mitchell, counsel for the
Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and
sale of Preferred Stock, the Registration
Statement, the Final Prospectus (together with any
supplement thereto) and other related matters as
the Representative may reasonably require, which
opinion or opinions shall be confirmed by a
subsequent opinion, dated the Second Closing Date,
to the extent applicable, in the event of the
Second Closing Date. In addition the Company
shall have furnished to such counsel such
documents as they request for the purpose of
enabling them to pass upon such matters.
(d) The Company shall have furnished to
the Representative certificate of the Company,
signed by the Chairman of the Board or the
President and the principal financial or
accounting officer of the Company, dated the
Closing Date, which certificate shall be confirmed
by a subsequent certificate, dated the Second
Closing Date, to the extent applicable, in the
event of the Second Closing Date, to the effect
that the signers of such certificate have
carefully examined the Registration Statement, the
Final Prospectus, any supplement to the Final
Prospectus and this Agreement and that:
(i) the representations and
warranties of the Company in this Agreement
are true and correct in all material respects
on and as of the Closing Date or the Second
Closing Date, as the case may be, with the
same effect as if made on the Closing Date or
the Second Closing Date, as the case may be,
and the Company has complied with all the
agreements and satisfied all the conditions
on its part to be performed or satisfied at
or prior to the Closing Date or the Second
Closing Date, as the case may be;
(ii) no stop order suspending
the effectiveness of the Registration
Statement has been issued and no proceedings
for that purpose have been instituted or, to
the Company's knowledge, threatened; and
(iii) since the date of the
most recent financial statements included in
the Final Prospectus (exclusive of any
supplement thereto), there has been no
material adverse change in the condition
(financial or other), earnings, business or
properties of the Company and its
<PAGE>
subsidiaries, whether or not
arising from transactions in the ordinary
course of business, except as set forth in or
contemplated in the Final Prospectus
(exclusive of any supplement thereto).
(e) At the Execution Time, KPMG Peat
Marwick LLP shall have furnished to the
Representative a letter, dated as of the Execution
Time, in form and substance satisfactory to the
Representative (the "initial letter"), and at the
Closing Date, KPMG Peat Marwick LLP shall have
furnished another letter (the "bring-down
letter"), which letter shall be confirmed by a
subsequent letter, dated the Second Closing Date,
to the extent applicable, in the event of the
Second Closing Date, confirming that they are
independent accountants within the meaning of the
Act and the respective applicable published rules
and regulations thereunder and stating in effect
that:
(i) in their opinion the
audited financial statements and financial
statement schedules which are included in the
Company's most recent Annual Report on Form
10-K, which is incorporated by reference in
the Registration Statement and the Final
Prospectus comply as to form in all material
respects with the applicable accounting
requirements of the Act and the Exchange Act
and the related published rules and
regulations;
(ii) on the basis of a
reading of the latest unaudited financial
statements made available by the Company and
its subsidiaries; carrying out certain
specified procedures (but not an examination
in accordance with generally accepted
auditing standards), including reading of the
minutes of the meetings of the stockholders,
the Board of Directors and Audit Committee of
the Company since the end of the year covered
by the Form 10-K as set forth in the minutes
books through a specified date not more than
five business days prior to the Execution
Time, the Closing Date or the Second Closing
Date, respectively, reading the unaudited
interim financial statements of the Company
incorporated by reference in the Prospectus
and the latest available unaudited interim
financial statements of the Company, and
making inquiries of certain officials of the
Company who have responsibility for financial
and accounting matters, nothing has come to
their attention that has caused them to
<PAGE>
believe that (1) any unaudited
financial statements incorporated by
reference in the Prospectus do not comply as
to form in all material respects with the
accounting requirements of the Exchange Act
and the related published rules and
regulations; (2) the latest available
financial statements, not incorporated by
reference in the Prospectus, have not been
prepared on a basis substantially consistent
with that of the audited financial statements
incorporated in the Prospectus; (3) for the
period from the closing date of the latest
income statement incorporated by reference in
the Prospectus to the closing date of the
latest available income statement read by
them there were any decreases, as compared
with the corresponding period of the previous
year, in net margin on mortgage assets or net
income; or (4) at a specified date not more
than five business days prior to the
Execution Time, Closing Date or Second
Closing Date, respectively, there was any
change in the capital stock or long term debt
of the Company or, at such date, there was
any decrease in net assets of the Company as
compared with amounts shown in the latest
balance sheet incorporated by reference in
the Prospectus, except in all cases for
changes or decreases which the Prospectus
discloses have occurred or may occur, or
which are described in such letter; and
(iii) certain specified
procedures not constituting an audit in
accordance with generally accepted auditing
standards have been applied to certain
financial or other statistical information
(to the extent such information was obtained
from the general accounting records of the
Company) set forth or incorporated by
reference in the Prospectus and that such
procedures have not revealed any disagreement
between the financial and statistical
information so set forth or incorporated and
the underlying general accounting records of
the Company, except as described in such
letter.
(f) Subsequent to the Execution Time
or, if earlier, the dates as of which information
is given in the Registration Statement (exclusive
of any amendment thereof) and the Final Prospectus
(exclusive of any supplement thereto), there shall
not have been (i) any change or decrease specified
in the letter or letters referred to in paragraph
(e) of this Section 5 or (ii) any change, or any
<PAGE>
development involving a prospective change,
in or affecting the business or properties of the
Company and its subsidiaries the effect of which,
in any case referred to in clause (i) or (ii)
above, is, in the judgment of the Representative,
so material and adverse as to make it impractical
or inadvisable to proceed with the offering or
delivery of the Preferred Stock as contemplated by
the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus
(exclusive of any supplement thereto).
(g) Prior to the Closing Date and the
Second Closing Date, the Company shall have
furnished to the Representative such further
information, certificates and documents as the
Representative may reasonably request in
connection with each of the Closing Date and the
Second Closing Date, as the case may be.
If any of the conditions specified in this Section 5
shall not have been fulfilled in all material respects when
and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representative and
counsel for the Underwriters, this Agreement and all
obligation of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the
Representative. Notice of such cancellation shall be given
to the Company in writing or by telephone or telegraph
confirmed in writing.
6. Reimbursement of Underwriters' Expenses. If the
sale of the Preferred Stock provided for herein is not
consummated because any condition to the obligations of the
Underwriters set forth in Section 5 hereof is not satisfied,
because of any termination pursuant to Section 9 hereof or
because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with
any provision hereof other than by reason of a default by
any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Preferred Stock.
7. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or
<PAGE>
state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration
statement for the registration of the Preferred Stock as
originally filed or in any amendment thereof, or in the
Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in
reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter
through the Representative specifically for inclusion
therein. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to
indemnify and hold harmless the Company, each of its
directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within
the meaning of either the Act or the Exchange Act, to the
same extent as the foregoing indemnity from the Company to
each Underwriter, but only with reference to written
information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the
Representative specifically for inclusion in the documents
referred to in the foregoing indemnity. This indemnity
agreement will be in addition to any liability which any
Underwriter may otherwise have. The Company acknowledges
that the statements set forth in the last paragraph of the
cover page and under the heading "Underwriting" in any
Preliminary Final Prospectus or the Final Prospectus
constitute the only information furnished in writing by or
on behalf of the several Underwriters for inclusion in the
documents referred to in the foregoing indemnity, and you,
as the Representative, confirm that such statements are
correct.
(c) Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of
any action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party
under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the failure so to
notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such
failure results in the
<PAGE>
forfeiture by the indemnifying party of substantial rights
and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be
entitled to appoint counsel of the indemnifying party's
choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that
such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the
right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees,
costs and expenses of such separate counsel if (i) the use
of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict
of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties
which are different from or additional to those available to
the indemnifying party, (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such
action or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not,
without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional
release of such indemnified party from all liability arising
out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided
in paragraph (a) or (b) of this Section 7 is unavailable to
or insufficient to hold harmless an indemnified party for
any reason, the Company and the Underwriters agree to
contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more
of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the
Company and by the Underwriters from the offering of the
Preferred Stock; provided, however, that in no case shall
any Underwriter (except as may be provided in any agreement
among underwriters
<PAGE>
relating to the offering of the Preferred Stock) be
responsible for any amount in excess of the amount by which
the total price at which the Preferred Stock underwritten by
it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has
otherwise paid or otherwise become liable to pay by reason
of any untrue statement or omission or alleged omission. If
the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the
Underwriters shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but
also the relative fault of the Company and of the
Underwriters in connection with the statements or omissions
which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company
shall be deemed to be equal to the total net proceeds from
the offering (before deducting expenses), and benefits
received by the Underwriters shall be deemed to be equal to
the total underwriting discounts and commissions, in each
case as set forth on the cover page of the Final Prospectus.
Relative fault shall be determined by reference to whether
any alleged untrue statement or omission relates to
information provided by the Company or the Underwriters.
The Company and the Underwriters agree that it would not be
just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to
above. Notwithstanding the provisions of this paragraph
(d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this
Section 7, each person who controls an Underwriter within
the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of an Underwriter
shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within
the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the
Registration Statement and each director of the Company
shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions
of this paragraph (d).
8. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the
Preferred Stock agreed to be purchased by such Underwriter
or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters
shall be obligated severally to take up and pay for (in the
respective proportions which the amount of Preferred Stock
set forth opposite their names in Schedule I hereto bears to
the aggregate amount of Preferred Stock set forth opposite
the names of all the remaining Underwriters) the Preferred
Stock which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in
the event
<PAGE>
that the aggregate amount of Preferred Stock which the
defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of
Preferred Stock set forth in Schedule I hereto, the
remaining Underwriters shall have the right to purchase all,
but shall not be under any obligation to purchase any, of
the Preferred Stock, and if such non-defaulting Underwriters
do not purchase all the Preferred Stock, this Agreement will
terminate without liability to any non-defaulting
Underwriter or the Company. In the event of a default by
any Underwriter as set forth in this Section 8, the Closing
Date or the Second Closing Date, as the case may be, shall
be postponed for such period, not exceeding seven days, as
the Representative shall determine in order that the
required changes in the Registration Statement and the Final
Prospectus or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the
Company and any non-defaulting Underwriter for damages
occasioned by its default hereunder.
9. Termination. This Agreement shall be subject to
termination in the absolute discretion of the
Representative, by notice given to the Company prior to
delivery of and payment for the Preferred Stock, if prior to
such time (i) trading in the Company's Common Stock shall
have been suspended by the Commission or the New York Stock
Exchange or trading in securities generally on the New York
Stock Exchange or the National Association of Securities
Dealers Automated Quotation National Market System shall
have been suspended or limited or minimum prices shall have
been established on either of such Exchange or Market
System, (ii) a banking moratorium shall have been declared
either by Federal or New York or Missouri State authorities
or (iii) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States
of a national emergency or war or other calamity or crisis
the effect of which on financial markets is such as to make
it, in the judgment of the Representative, impracticable or
inadvisable to proceed with the offering or delivery of the
Preferred Stock as contemplated by the Final Prospectus
(exclusive of any supplement thereto).
10. Representations and Indemnities to Survive. The
respective agreement, representations, warranties,
indemnities and other statements of the Company or its
officers and of the Underwriters set forth in or made
pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers,
directors or controlling persons referred to in Section 7
hereof, and will survive delivery of and payment for the
Preferred Stock. The provisions of Sections 6 and 7 hereof
shall survive the termination or cancellation of this
Agreement.
<PAGE>
11. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the
Representative, will be mailed, delivered or telegraphed and
confirmed to them, at 500 North Broadway, St. Louis,
Missouri; or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 2800 East
Parham Road, Richmond, Virginia 23228.
12. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and
controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder.
13. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to
be an original and all of which together shall constitute
one and the same instrument.
14. Applicable Law. This Agreement will be governed
by and construed in accordance with the laws of the State of
Missouri.
<PAGE>
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us
the enclosed duplicate hereof, whereupon this letter and
your acceptance shall represent a binding agreement among
the Company and the several Underwriters.
Very truly yours,
RESOURCE MORTGAGE CAPITAL, INC.
By: /s/ LYNN K. GEURIN
Lynn K. Geurin
Executive Vice President
STIFEL, NICOLAUS & COMPANY, INCORPORATED
By: /s/ RICK E. MAPLES
Rick E. Maples
Senior Vice President
For itself and the other several
Underwriters, if any, named in Schedule I
to the foregoing Agreement.
<PAGE>
June 26, 1995
SCHEDULE I
Amount and Purchase Price of Series A 9.75% Cumulative
Convertible Preferred Stock:
Number of shares: 1,350,000 shares
Purchase price per share: $22.98
Closing Date, Time and Location:
June 30, 1995
10:00 a.m.
Thompson & Mitchell
700 14th Street, N.W.
Suite 900
Washington, DC 20005
Amount of Option Stock subject
to 30-day option
(ending July 25,
1995) to purchase at same price
with same underwriting discount
to cover over-allotments: 202,500 shares
Underwriters:
Number of
Shares
Stifel, Nicolaus & Company, 810,000
Incorporated
500 North Broadway
St. Louis, Missouri 63101
Stephens Inc.
111 Center Street
Little Rock, AR 72201 135,000
<PAGE>
Rauscher Pierce Refsnes, Inc.
Plaza of the Americas
2500 RPR Tower
Dallas, TX 75201 135,000
McDonald & Company Securities, Inc.
800 Superior Avenue
Suite 2100
Cleveland, OH 44114-2603 135,000
Scott & Stringfellow, Inc.
909 East Main Street
Richmond, VA 23219 135,000
TOTAL 1,350,000
<PAGE>
EXHIBIT 4.1
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
RESOURCE MORTGAGE CAPITAL, INC.
1. The name of the Corporation is Resource Mortgage
Capital, Inc.
2. A new Article IIIA shall be inserted following the
existing text of Article III and shall read as set forth in
Exhibit A hereto.
3. This Amendment to the Articles of Incorporation was
duly adopted by resolution of the Board of Directors of the
Corporation at a meeting of directors held on April 25,
1995. In accordance with Sections 13.1-706.6 and 13.1-639
of the Virginia Stock Corporations Act, no shareholder
action was required.
IN WITNESS WHEREOF, the undersigned President of the
Corporation has executed these Articles of Amendment on
behalf of the Corporation.
Date: June 21, 1995 RESOURCE MORTGAGE CAPITAL,
INC.
By: /s/ THOMAS H. POTTS
Thomas H. Potts
President
<PAGE>
RESOURCE MORTGAGE CAPITAL, INC.
Section 1. Number of Shares and Designation. This
series of Preferred Stock shall be designated as Series A
Cumulative Convertible Preferred Stock (the "Series A
Preferred Stock") and up to One Million Five Hundred Fifty-
Two Thousand Five Hundred (1,552,500) shall be the number of
shares of such Preferred Stock constituting such series.
Section 2. Definitions. For purposes of the Series
A Preferred Stock, the following terms shall have the
meanings indicated:
"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.
"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 A 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.
"Call Date" shall have the meaning set forth in
paragraph (b) of Section 5 hereof.
"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 such Common
Stock shall be reclassified.
"Conversion Price" shall mean the conversion price per
share of Common Stock for which each share of Series A
Preferred Stock is convertible, as such Conversion
Price may be adjusted pursuant to paragraph (d) of
Section 7. The initial Conversion Price shall be
$24.00 (equivalent to an initial conversion rate of one
share of Common Stock for each share of Series A
Preferred Stock).
"Current Market Price" of publicly traded shares of
Common Stock or any other class or series of capital
stock or other security of the Corporation or of any
similar security of any other issuer for any day shall
mean the closing 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 regular way on
such day, in either case as
<PAGE>
reported on the New York Stock Exchange ("NYSE") or, if
such security is not listed or admitted for trading on
the NYSE, 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 National
Market of the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ")
or, if such security is not quoted on such 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 NYSE or National Association of
Securities Dealers, Inc. member firm regularly making a
market in such security selected for such purpose by
the Chief Executive Officer or the Board of Directors
or if any class or series of securities are not
publicly traded, the fair value of the shares of such
class as determined reasonably and in good faith by the
Board of Directors of the Corporation.
"Distribution" shall have the meaning set forth in
paragraph (d)(iii) of Section 7 hereof.
"Dividend Payment Date" shall mean, with respect to
each Dividend Period, the fifteenth day of January,
April, July and October, in each year, commencing on
October 15, 1995; provided, however, that if any
Dividend Payment Date falls on any day other than a
Business Day, the dividend payment due on such Dividend
Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend
periods commencing on January 1, April 1, July 1 and
October 1 of each year and ending on and including the
day preceding the first day of the next succeeding
Dividend Period (other than the initial Dividend
Period, which shall commence on the Issue Date and end
on and include September 30, 1995).
"Fair Market Value" shall mean the average of the daily
Current Market Prices of a share of Common Stock during
five (5) consecutive Trading Days selected by the
Corporation commencing not more than twenty (20)
Trading Days before, and ending not later than, the
earlier of the day in question and the day before the
"ex" date with respect to the issuance or distribution
requiring such computation. The term "`ex' date," when
used with respect to any issuance or distribution,
means the first day on which the share of Common Stock
trades regular way, without the right to receive such
issuance or distribution, on the exchange or in the
market, as the case may be, used to determine that
day's Current Market Price.
<PAGE>
"Issue Date" shall mean June 30, 1995.
"Junior Stock" shall mean the Common Stock and any
other class or series of capital stock of the
Corporation over which the shares of Series A Preferred
Stock have preference or priority in the payment of
dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the
Corporation.
"Parity Stock" shall have the meaning set forth in
paragraph (b) of Section 8 hereof.
"Person" shall mean any individual, firm, partnership,
corporation or other entity and shall include any
successor (by merger or otherwise) of such entity.
"Press Release" shall have the meaning set forth in
paragraph (a)(i) of Section 5 hereof.
"Series A Preferred Stock" shall have the meaning set
forth in Section 1 hereof.
"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 dividends or other
distribution by the Board of Directors, the allocation
of funds to be so paid on any series or class of
capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior
Stock or any class or series of Parity Stock 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 A
Preferred Stock shall mean placing such funds in a
separate account or delivering such funds to a
disbursing, paying or other similar agent.
"Trading Day", as to any securities, shall mean any day
on which such securities are traded on the NYSE or, if
such securities are not listed or admitted for trading
on the NYSE, on the principal national securities
exchange on which such securities are listed or
admitted or, if such securities are not listed or
admitted for trading on any national securities
exchange, on the National Market of NASDAQ or, if such
securities are not quoted on such National Market, in
the securities market in which such securities are
traded.
"Transaction" shall have the meaning set forth in
paragraph (e) of Section 7 hereof.
<PAGE>
"Transfer Agent" means First Union National Bank of
North Carolina or such other transfer agent as may be
designated by the Board of Directors or their designee
as the transfer agent for the Series A Preferred Stock.
"Voting Preferred Stock" shall have the meaning set
forth in Section 9 hereof.
Section 3. Dividends.
(a) The holders of Series A Preferred Stock shall
be entitled to receive, when and as declared by the Board of
Directors out of funds legally available for that purpose,
cumulative dividends payable in cash in an amount per share
of Series A Preferred Stock equal to the greater of (i) the
base dividend of $0.585 per quarter (the "Base Rate") or
(ii) the cash dividends declared on the number of shares of
Common Stock, or portion thereof, into which a share of
Series A Preferred Stock is convertible. The initial
Dividend Period shall commence on the Issue Date and end on
September 30, 1995. The dividends payable with respect to
the portion of the initial Dividend Period commencing on the
Issue Date and ending on June 30, 1995, shall be determined
by reference to the Base Rate. The amount referred in
clause (ii) of this paragraph (a) with respect to each
Dividend Period shall be determined as of the applicable
Dividend Payment Date by multiplying the number of shares of
Common Stock, or portion thereof calculated to the fourth
decimal point, into which a share of Series A Preferred
Stock would be convertible at the opening of business on
such Dividend Payment Date (based on the Conversion Price
then in effect) by the quarterly cash dividend payable or
paid for such Dividend Period in respect of a share of
Common Stock outstanding as of the record date for the
payment of dividends on the Common Stock with respect to
such Dividend Period or, if different, with respect to the
most recent quarterly period for which dividends with
respect to the Common Stock have been declared. Such
dividends shall be cumulative from the Issue Date, whether
or not in any Dividend Period or Periods such dividends
shall be declared or there shall be funds of the Corporation
legally available for the payment of such dividends, and
shall be payable quarterly in arrears on the Dividend
Payment Dates, commencing on the first Dividend Payment Date
after the Issue Date. Each such dividend shall be payable
in arrears to the holders of record of the Series A
Preferred Stock, as they appear on the stock records of the
Corporation at the close of business on a record date which
shall be not more than 60 days prior to the applicable
Dividend Payment Date and shall be fixed by the Board of
Directors to coincide with the record date for the regular
quarterly dividends, if any, payable with respect to the
Common Stock; provided, however, that the record dates for
the Dividend Period ending December 31, may be separated so
that the record date for the Common Stock dividend is
December 31 and the record date for the Preferred Stock
dividend is January 1 and vice versa. Accumulated, accrued
and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any
regular Dividend Payment Date, to holders of record on such
date, which date shall not precede by more than 45 days the
payment date thereof, as may be fixed by the Board of
Directors.
<PAGE>
Upon a final administrative determination by the
Internal Revenue Service that the Corporation does not
qualify as a real estate investment trust in accordance with
Section 856 of the Internal Revenue code of 1986 (the
"Code"), the Base Rate set forth in (a)(i) will be increased
to $0.615 until such time as the Corporation regains its
status as a real estate investment trust; provided, however,
that if the Corporation contests its loss of real estate
investment trust status in Federal Court, following its
receipt of an opinion of nationally recognized tax counsel
to the effect that there is a reasonable basis to contest
such loss of status, the Base Rate shall not be increased
during the pendency of such judicial proceeding; provided
further, however, that upon a final judicial determination
in Federal Tax Court, Federal District Court or the Federal
Claims Court that the Corporation does not qualify as a real
estate investment trust, the Base Rate as stated above will
be increased.
(b) The amount of dividends payable per share of
Series A Preferred Stock for the portion of the initial
Dividend Period commencing on the Issue Date and ending and
including June 30, 1995, or any other period shorter than a
full Dividend Period, shall be computed ratably on the basis
of twelve 30-day months and a 360-day year. Holders of
Series A Preferred Stock shall not be entitled to any
dividends, whether payable in cash, property or stock, in
excess of cumulative dividends, as herein provided, on the
Series A Preferred Stock. No interest, or sum of money in
lieu of interest, shall be payable in respect of any
dividend payment or payments on the Series A Preferred Stock
that may be in arrears.
(c) So long as any of the shares of Series A
Preferred Stock are outstanding, except as described in the
immediately following sentence, no dividends shall be
declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be
declared or made directly or indirectly by the Corporation
with respect to any class or series of Parity Stock for any
period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or
contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof has been or
contemporaneously is set apart for such payment on the
Series A Preferred Stock for all Dividend Periods
terminating on or prior to the Dividend Payment Date with
respect to such class or series of Parity Stock. When
dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends
declared upon the Series A Preferred Stock and all dividends
declared upon any other class or series of Parity Stock
shall be declared ratably in proportion to the respective
amounts of dividends accumulated, accrued and unpaid on the
Series A Preferred Stock and accumulated, accrued and unpaid
on such Parity Stock.
(d) So long as any of the shares of Series A
Preferred Stock are outstanding, no dividends (other than
dividends or distributions paid in shares of or options,
warrants or rights to subscribe for or purchase shares of
Junior Stock) shall be
<PAGE>
declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be
declared or made directly or indirectly by the Corporation
with respect to any shares of Junior Stock, nor shall any
shares of Junior Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other
acquisition of Common Stock made for purposes of an employee
incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of
any shares of any such stock) directly or indirectly by the
Corporation (except by conversion into or exchange for
Junior Stock), nor shall any other cash or other property
otherwise be paid or distributed to or for the benefit of
any holder of shares of Junior Stock in respect thereof,
directly or indirectly, by the Corporation unless in each
case (i) the full cumulative dividends (including all
accumulated, accrued and unpaid dividends) on all
outstanding shares of Series A Preferred Stock and any other
Parity Stock of the Corporation shall have been paid or such
dividends have been declared and set apart for payment for
all past Dividend Periods with respect to the Series A
Preferred Stock and all past dividend periods with respect
to such Parity Stock and (ii) sufficient funds shall have
been paid or set apart for the payment of the full dividend
for the current Dividend Period with respect to the Series A
Preferred Stock and the current dividend period with respect
to such Parity Stock.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or
involuntary, before any payment or distribution of the
assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of Junior Stock, the
holders of shares of Series A Preferred Stock shall be
entitled to receive Twenty-Four Dollars ($24.00) per share
of Series A Preferred Stock ("Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or
declared) accumulated, accrued and unpaid thereon to the
date of final distribution to such holders; but such holders
shall not be entitled to any further payment. Until the
holders of the Series A Preferred Stock have been paid the
Liquidation Preference in full, plus an amount equal to all
dividends (whether or not earned or declared) accumulated,
accrued and unpaid thereon to the date of final distribution
to such holders, no payment will be made to any holder of
Junior Stock upon the liquidation, dissolution or winding up
of the Corporation. If, upon any liquidation, dissolution
or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the
holders of Series A Preferred Stock shall be insufficient to
pay in full the preferential amount aforesaid and
liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds
thereof, shall be distributed among the holders of Series A
Preferred Stock and any such other Parity Stock ratably in
the same proportion as the respective amounts that would be
payable on such Series A Preferred Stock and any such other
Parity Stock if all amounts payable thereon were paid in
full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with
<PAGE>
one or more corporations, (ii) a sale or transfer of all or
substantially all of the Corporation's assets, or (iii) a
statutory share exchange shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or
involuntary, of the Corporation.
(b) Subject to the rights of the holders of any
shares of Parity Stock, upon any liquidation, dissolution or
winding up of the Corporation, after payment shall have been
made in full to the holders of Series A Preferred Stock and
any Parity Stock, as provided in this Section 4, any other
series or class or classes of Junior Stock shall, subject to
the respective terms thereof, be entitled to receive any and
all assets remaining to be paid or distributed, and the
holders of the Series A Preferred Stock and any Parity Stock
shall not be entitled to share therein.
Section 5. Redemption at the Option of the
Corporation.
(a) Shares of Series A Preferred Stock shall not
be redeemable by the Corporation prior to June 30, 1998. On
and after June 30, 1998, the Corporation, at its option, may
redeem shares of Series A Preferred Stock, in whole or from
time to time in part, as set forth herein, subject to the
provisions described below:
(i) Shares of Series A Preferred Stock may
be redeemed, in whole or in part, at the option of the
Corporation, at any time on or after June 30, 1998 by
issuing and delivering to each holder for each share of
Series A Preferred Stock to be redeemed such number of
authorized but previously unissued shares of Common
Stock as equals the Liquidation Preference (excluding
any accumulated, accrued and unpaid dividends which are
to be paid in cash as provided below) per share of
Series A Preferred Stock divided by the Conversion
Price as in effect as of the opening of business on the
Call Date (as defined in paragraph (b) below);
provided, however, that the Corporation may redeem
shares of Series A Preferred Stock pursuant to this
paragraph (a)(i) only if for twenty (20) Trading Days,
within any period of thirty (30) consecutive Trading
Days, including the last Trading Day of such 30-Trading
Day period, the Current Market Price of the Common
Stock on each of such 20 Trading Days equals or exceeds
the Conversion Price in effect on such Trading Day. In
order to exercise its redemption option pursuant to
this paragraph (a)(i), the Corporation must issue a
press release announcing the redemption (the "Press
Release") prior to the opening of business on the
second Trading Day after the condition in the preceding
sentence has, from time to time, been satisfied. The
Corporation may not issue a Press Release prior to
April 30, 1998. The Press Release shall announce the
redemption and set forth the number of shares of Series
A Preferred Stock that the Corporation intends to
redeem; or
<PAGE>
(ii) Shares of Series A Preferred Stock may
be redeemed, in whole or in part, at the option of the
Corporation at any time on or after June 30, 1998 out
of funds legally available therefor at a redemption
price payable in cash equal to $24.00 per share of
Series A Preferred Stock (plus all accumulated, accrued
and unpaid dividends as provided below).
(iii) In the event of a redemption
pursuant to Section 5(a)(i), the Corporation shall pay
in cash all cumulative, accrued and unpaid dividends
for all Dividend Periods ending prior to the Dividend
Period in which the redemption occurs; but no dividend
shall accrue or be payable on the Series A Preferred
Stock to be redeemed for the Dividend Period in which
the redemption occurs unless the Call Date is after the
record date for the dividend payable on the Common
Stock for such Dividend Period in which event such
dividend with respect to the Series A Preferred Stock
shall accrue and be payable from the period beginning
of the Dividend Period in which the redemption occurs
and ending on the Call Date. In the event of a
redemption pursuant to Section 5(a)(ii), the
Corporation shall pay in cash all cumulative, accrued
and unpaid dividends for all Dividend Periods ending
prior to the Dividend Period in which the redemption
occurs, plus the dividend (determined by reference to
the Base Rate if the Call Date precedes the date on
which the dividend on the Common Stock is declared for
such Dividend Period) accrued from the beginning of the
Dividend Period in which the redemption occurs and
ending on the Call Date.
(b) Shares of Series A Preferred Stock shall be
redeemed by the Corporation on the date specified in the
notice to holders required under paragraph (d) of this
Section 5 (the "Call Date"). The Call Date shall be
selected by the Corporation, shall be specified in the
notice of redemption and shall be not less than 30 days nor
more than 60 days after (i) the date on which the
Corporation issues the Press Release, if such redemption is
pursuant to paragraph (a)(i) of this Section 5, and (ii) the
date notice of redemption is sent by the Corporation, if
such redemption is pursuant to paragraph (a)(ii) of this
Section 5. In the event of a redemption pursuant to Section
5(a)(i) or 5(a)(ii), if the Call Date falls after a dividend
payment record date and prior to the corresponding Dividend
Payment Date, then (i) in the event of a redemption pursuant
to Section 5(a)(i) each holder of Series A Preferred Stock
at the close of business on such dividend payment record
date shall be entitled to the dividend payable on such
shares on the corresponding Dividend Payment Date
notwithstanding the redemption of such shares prior to such
Dividend Payment Date and (ii) in the event of a redemption
pursuant to Section 5(a)(ii), each holder of Series A
Preferred Stock at the close of business on such dividend
payment record date shall be entitled to the portion of the
dividend accrued from the beginning of the Dividend Period
in which the redemption occurs and ending on the Call Date
notwithstanding the redemption of such shares prior to such
Dividend Payment Date. Except as provided above, the
Corporation shall make no payment or allowance for
<PAGE>
accumulated or accrued dividends on shares of Series A
Preferred Stock called for redemption or on the shares of
Common Stock issued upon such redemption.
(c) If full cumulative dividends on all
outstanding shares of Series A Preferred Stock and any other
class or series of Parity Stock of the Corporation have not
been paid or declared and set apart for payment, no shares
of Series A Preferred Stock may be redeemed unless all
outstanding shares of Series A Preferred Stock are
simultaneously redeemed and neither the Corporation nor any
affiliate of the Corporation may purchase or acquire shares
of Series A Preferred Stock, otherwise than pursuant to a
purchase or exchange offer made on the same terms to all
holders of shares of Series A Preferred Stock.
(d) If the Corporation shall redeem shares of
Series A Preferred Stock pursuant to paragraph (a) of this
Section 5, notice of such redemption shall be given to each
holder of record of the shares to be redeemed and, if such
redemption is pursuant to paragraph (a)(i) of this Section
5, such notice shall be given not more than ten (10)
Business Days after the date on which the Corporation issues
the Press Release. Such notice shall be provided by first
class mail, postage prepaid, at such holder's address as the
same appears on the stock records of the Corporation, or by
publication in The Wall Street Journal or The New York
Times, or if neither such newspaper is then being published,
any other daily newspaper of national circulation not less
than 30 nor more than 60 days prior to the Call Date. If
the Corporation elects to provide such notice by
publication, it shall also promptly mail notice of such
redemption to the holders of the shares of Series A
Preferred Stock to be redeemed. Neither the failure to mail
any notice required by this paragraph (d), nor any defect
therein or in the mailing thereof, to any particular holder,
shall affect the sufficiency of the notice or the validity
of the proceedings for redemption with respect to the other
holders. Any notice which was mailed in the manner herein
provided shall be conclusively presumed to have been duly
given on the date mailed whether or not the holder receives
the notice. Each such mailed or published notice shall
state, as appropriate: (1) the Call Date; (2) the number of
shares of Series A Preferred Stock to be redeemed and, if
fewer than all such shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such
holder; (3) whether redemption will be for shares of Common
Stock pursuant to paragraph (a)(i) of this Section 5 or for
cash pursuant to paragraph (a)(ii) of this Section 5, and,
if redemption will be for Common Stock, the number of shares
of Common Stock to be issued with respect to each share of
Series A Preferred Stock to be redeemed; (4) the place or
places at which certificates for such shares are to be
surrendered for certificates representing shares of Common
Stock; and (5) the then-current Conversion Price. Notice
having been published or mailed as aforesaid, from and after
the Call Date (unless the Corporation shall fail to issue
and make available the number of shares of Common Stock
and/or amount of cash necessary to effect such redemption),
(i) except as otherwise provided herein, dividends on the
shares of Series A Preferred Stock so called for redemption
shall cease to accumulate or accrue on the shares of Series
A Preferred Stock
<PAGE>
called for redemption (except that, in the case of a Call
Date after a dividend record date and prior to the related
Dividend Payment Date, holders of Series A Preferred Stock
on the dividend record date will be entitled on such
Dividend Payment Date to receive the dividend payable on
such shares), (ii) said shares shall no longer be deemed to
be outstanding, and (iii) all rights of the holders thereof
as holders of Series A Preferred Stock of the Corporation
shall cease (except the rights to receive the shares of
Common Stock and/or cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of
their certificates if so required and to receive any
dividends payable thereon). The Corporation's obligation to
provide shares of Common Stock and/or cash in accordance
with the preceding sentence shall be deemed fulfilled if, on
or before the Call Date, the Corporation shall deposit with
a bank or trust company (which may be an affiliate of the
Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least
$50,000,000, such number of shares of Common Stock and such
amount of cash as is necessary for such redemption, in
trust, with irrevocable instructions that such shares of
Common Stock and/or cash be applied to the redemption of the
shares of Series A Preferred Stock so called for redemption.
In the case of any redemption pursuant to paragraph (a)(i)
of this Section 5, at the close of business on the Call
Date, each holder of shares of Series A Preferred Stock to
be redeemed (unless the Corporation defaults in the delivery
of the shares of Common Stock or cash payable on such Call
Date) shall be deemed to be the record holder of the number
of shares of Common Stock into which such shares of Series A
Preferred Stock are to be converted at redemption,
regardless of whether such holder has surrendered the
certificates representing the shares of Series A Preferred
Stock to be so redeemed. No interest shall accrue for the
benefit of the holders of shares of Series A Preferred Stock
to be redeemed on any cash so set aside by the Corporation.
Subject to applicable escheat laws, any such cash unclaimed
at the end of two years from the Call Date shall revert to
the general funds of the Corporation, after which reversion
the holders of shares of Series A Preferred Stock so called
for redemption shall look only to the general funds of the
Corporation for the payment of such cash.
As promptly as practicable after the surrender in
accordance with said notice of the certificates for any such
shares so redeemed (properly endorsed or assigned for
transfer, if the Corporation shall so require and if the
notice shall so state), such certificates shall be exchanged
for certificates representing shares of Common Stock and/or
any cash (without interest thereon) for which such shares
have been redeemed in accordance with such notice. If fewer
than all the outstanding shares of Series A Preferred Stock
are to be redeemed, shares to be redeemed shall be selected
by the Corporation from outstanding shares of Series A
Preferred Stock not previously called for redemption by lot
or, with respect to the number of shares of Series A
Preferred Stock held of record by each holder of such
shares, pro rata (as nearly as may be) or by any other
method as may be determined by the Board of Directors in its
discretion to be equitable. If fewer than all the shares of
Series A Preferred Stock represented by any
<PAGE>
certificate are redeemed, then a new certificate
representing the unredeemed shares shall be issued without
cost to the holders thereof.
(e) In the case of any redemption pursuant to
paragraph (a)(i) of this Section 5, no fractional shares of
Common Stock or scrip representing fractions of shares of
Common Stock shall be issued upon redemption of the shares
of Series A Preferred Stock. Instead of any fractional
interest in a share of Common Stock that would otherwise be
deliverable upon redemption of shares of Series A Preferred
Stock, the Corporation shall pay to the holder of such share
an amount in cash (computed to the nearest cent) based upon
the Current Market Price of the Common Stock on the Trading
Day immediately preceding the Call Date. If more than one
share shall be surrendered for redemption at one time by the
same holder, the number of full shares of Common Stock
issuable upon redemption thereof shall be computed on the
basis of the aggregate number of shares of Series A
Preferred Stock so surrendered.
(f) In the case of any redemption pursuant to
paragraph (a)(i) of this Section 5, the Corporation
covenants that any shares of Common Stock issued upon
redemption of shares of Series A Preferred Stock shall be
validly issued, fully paid and non-assessable. The
Corporation shall use its best efforts to list, subject to
official notice of issuance, the shares of Common Stock
required to be delivered upon any such redemption of shares
of Series A Preferred Stock, prior to such redemption, upon
each national securities exchange, if any, upon which the
outstanding shares of 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 the
redemption of Series A Preferred Stock are freely
transferable 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 issued upon
redemption of any Series A Preferred Stock which are held by
an "affiliate" (as defined in Rule 144 under the Act) of the
Corporation).
Section 6. Stock To Be Retired. All shares of
Series A Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be
restored to the status of authorized, but unissued shares of
Preferred Stock, without designation as to series. The
Corporation may also retire any unissued shares of Series A
Preferred Stock, and such shares shall then be restored to
the status of authorized but unissued shares of Preferred
Stock, without designation as to series.
Section 7. Conversion.
Holders of shares of Series A Preferred Stock shall
have the right to convert all or a portion of such shares
into shares of Common Stock, as follows:
<PAGE>
(a) Subject to and upon compliance with the
provisions of this Section 7, a holder of shares of Series A
Preferred Stock shall have the right, at such holder's
option, at any time to convert such shares, in whole or in
part, into the number of fully paid and non-assessable
shares of authorized but previously unissued shares of
Common Stock per each share of Series A Preferred Stock
obtained by dividing the Liquidation Preference (excluding
any accumulated, accrued and unpaid dividends) by the
Conversion Price (as in effect at the time and on the date
provided for in the last clause of paragraph (b) of this
Section 7) and by surrendering such shares to be converted,
such surrender to be made in the manner provided in
paragraph (b) of this Section 7; provided, however, that the
right to convert shares of Series A Preferred Stock called
for redemption pursuant to Section 5 shall terminate at the
close of business on the Call Date fixed for such
redemption, unless the Corporation shall default in making
payment of shares of Common Stock and/or cash payable upon
such redemption under Section 5 hereof.
(b) In order to exercise the conversion right,
the holder of each share of Series A Preferred Stock to be
converted shall surrender the certificate representing such
share, 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 share of Series A Preferred Stock.
Unless the shares issuable on conversion are to be issued in
the same name as the name in which such share of Series A
Preferred Stock is 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 attorney 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 shares of Series A Preferred Stock at the
close of business on a dividend payment record date shall be
entitled to receive the dividend payable on such shares on
the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record
date and prior to such Dividend Payment Date. Except as
provided above, the Corporation shall make no payment or
allowance for unpaid dividends, whether or not in arrears,
on converted shares or for dividends on the shares of Common
Stock issued upon such conversion.
As promptly as practicable after the surrender of
certificates for shares of Series A Preferred Stock as
aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, or send on such holder's written
order, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such
shares of Series A Preferred Stock in accordance with
provisions of this Section 7, and any fractional interest in
respect of a share of Common Stock arising upon such
conversion shall be settled as provided in paragraph (c) of
this Section 7.
<PAGE>
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on
which the certificates for shares of Series A Preferred
Stock shall have been surrendered and such notice received
by the Corporation as aforesaid, and the person or persons
in whose name or names any certificate or certificates for
shares of 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 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 close 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 shares shall have been surrendered and such
notice received by the Corporation. If the dividend payment
record date for the Series A Preferred Stock and Common
Stock do not coincide, and the preceding sentence does not
operate to ensure that a holder of shares of Series A
Preferred Stock whose shares are converted into Common Stock
does not receive dividends on both the shares of Series A
Preferred Stock and the Common Stock into which such shares
are converted for the same Dividend Period, then
notwithstanding anything herein to the contrary, it is the
intent, and the Transfer Agent is authorized to ensure that
no conversion after the earlier of such record dates will be
accepted until after the latter of such record dates.
(c) No fractional share of Common Stock or scrip
representing fractions of a share of Common Stock shall be
issued upon conversion of the shares of Series A Preferred
Stock. Instead of any fractional interest in a share of
Common Stock that would otherwise be deliverable upon the
conversion of shares of Series A Preferred Stock, the
Corporation shall pay to the holder of such share an amount
in cash based upon the Current Market Price of the Common
Stock on the Trading Day immediately preceding the date of
conversion. If more than one share shall be surrendered for
conversion at one time by the same holder, the number of
full shares of Common Stock issuable upon conversion thereof
shall be computed on the basis of the aggregate number of
shares of Series A Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from
time to time as follows:
(i) If the Corporation shall after the Issue
Date (A) pay a dividend or make a distribution on its
capital stock in shares of Common Stock, (B) subdivide
its outstanding Common Stock into a greater number of
shares, (C) combine its outstanding Common Stock into a
smaller number of shares or (D) issue any shares of
capital stock by reclassification of its Common Stock,
the Conversion Price in effect at the opening of
business on the day following the date fixed for the
determination of stockholders entitled to receive such
dividend or distribution or at the opening of business
on the day following the day on
<PAGE>
which such subdivision, combination or
reclassification becomes effective, as the case may be,
shall be adjusted so that the holder of any share of
Series A Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of
shares of Common Stock (or fraction of a share of
Common Stock) that such holder would have owned or have
been entitled to receive after the happening of any of
the events described above had such share of Series A
Preferred Stock been converted immediately prior to the
record date in the case of a dividend or distribution
or the effective date in the case of a subdivision,
combination or reclassification. An adjustment made
pursuant to this paragraph (d)(i) of this Section 7
shall become effective immediately after the opening of
business on the day next following the record date
(except as provided in paragraph (h) below) in the case
of a dividend or distribution and shall become
effective immediately after the opening of business on
the day next following the effective date in the case
of a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the
Issue Date rights, options or warrants to all holders
of Common Stock entitling them (for a period expiring
within 45 days after the record date described below in
this paragraph (d)(ii) of this Section 7) to subscribe
for or purchase Common Stock at a price per share less
than the Fair Market Value per share of the Common
Stock on the record date for the determination of
stockholders entitled to receive such rights or
warrants, then the Conversion Price in effect at the
opening of business on the day next following such
record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in
effect immediately prior to the opening of business on
the day following the date fixed for such determination
by (B) a fraction, the numerator of which shall be the
sum of (X) the number of shares of Common Stock
outstanding on the close of business on the date fixed
for such determination and (Y) the number of shares
that the aggregate proceeds to the Corporation from the
exercise of such rights or warrants for Common Stock
would purchase at such Fair Market Value, and the
denominator of which shall be the sum of (XX) the
number of shares of Common Stock outstanding on the
close of business on the date fixed for such
determination and (YY) the number of additional shares
of Common Stock offered for subscription or purchase
pursuant to such rights or warrants. Such adjustment
shall become effective immediately after the opening of
business on the day next following such record date
(except as provided in paragraph (h) below). In
determining whether any rights or warrants entitle the
holders of Common Stock to subscribe for or purchase
Common Stock at less than such Fair Market Value, there
shall be taken into account any consideration received
by the Corporation upon issuance and upon exercise of
such rights or warrants, the value of such
consideration, if other than cash, to be determined in
good faith by the Board of Directors.
<PAGE>
(iii) 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 paragraph (d)(iii)
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 7 (other than this paragraph
(d)(iii)) not later than such time as may be required
in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock.
Notwithstanding any other provisions of this Section 7,
the Corporation shall not be required to make any
adjustment of the Conversion Price for the issuance of
any shares of Common Stock pursuant to any plan
providing for the reinvestment of dividends or interest
payable on securities of the Corporation and the
investment of additional optional amounts in shares of
Common Stock under such plan. All calculations under
this Section 7 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. Anything in this paragraph (d) of
this Section 7 to the contrary notwithstanding, the
Corporation shall be entitled, to the extent permitted
by law, to make such reductions in the Conversion
Price, in addition to those required by this paragraph
(d), as it in its discretion shall determine to be
advisable in order that any stock dividends,
subdivision of shares, reclassification or combination
of shares, distribution of rights or warrants to
purchase stock or securities, or a distribution of
other assets (other than cash dividends) hereafter made
by the Corporation to its stockholders shall not be
taxable, or if that is not possible, to diminish any
income taxes that are otherwise payable because of such
event.
(e) If the Corporation shall be a party to any
transaction (including without limitation a merger,
consolidation, statutory share exchange, issuer or self
tender offer for all or a substantial portion of the shares
of Common Stock outstanding, sale of all or substantially
all of the Corporation's assets or recapitalization of the
Common Stock, but excluding any transaction as to which
paragraph (d)(i) of this Section 7 applies) (each of the
foregoing being referred to herein as a "Transaction"), in
each case as a result of which shares of Common Stock shall
be converted into the right to receive stock, securities or
other property (including cash or any combination thereof),
each share of Series A Preferred Stock which is not
converted into the right to receive stock, securities or
other property in connection with such Transaction shall
thereupon be convertible into the kind and amount of shares
of stock, securities and other property (including cash or
any combination thereof) receivable upon such consummation
by a holder of that number of shares of Common Stock into
which one share of Series A Preferred Stock was convertible
immediately prior to such Transaction. The Corporation
shall not be a party to any Transaction unless the terms of
such Transaction are consistent with the provisions of this
paragraph (e), and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has
entered into an agreement with
<PAGE>
the successor or purchasing entity, as the case may be, for
the benefit of the holders of the Series A Preferred Stock
that will contain provisions enabling the holders of the
Series A Preferred Stock that remain outstanding after such
Transaction to convert into the consideration received by
holders of Common Stock at the Conversion Price in effect
immediately prior to such Transaction. The provisions of
this paragraph (e) shall similarly apply to successive
Transactions.
(f) If:
(i) the Corporation shall declare a dividend
(or any other distribution) on the Common Stock (other
than cash dividends and cash distributions); or
(ii) the Corporation shall authorize the
granting to all holders of the Common Stock of rights
or warrants to subscribe for or purchase any shares of
any class or series of capital stock or any other
rights or warrants; or
(iii) there shall be any reclassification
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, or an issuer or self tender
offer by the Corporation for all or a substantial
portion of its outstanding shares of Common Stock (or
an amendment thereto changing the maximum number of
shares sought or the amount or type of consideration
being offered therefor) or the sale or transfer of all
or substantially all of the assets of the Corporation
as an entirety; or
(iv) 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 each holder
of shares of Series A Preferred Stock at such holder's
address as shown on the stock records of the Corporation, as
promptly as possible, but at least 15 days prior to the
applicable date hereinafter specified, a notice stating (A)
the record date for the payment of such dividend,
distribution or rights or warrants, or, if a record date is
not established, the date as of which the holders of Common
Stock of record to be entitled to such dividend,
distribution or rights or warrants are to be determined or
(B) 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 shares of 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 or (C) the date on which such tender offer
commenced, the date on which such tender offer is scheduled
to expire unless
<PAGE>
extended, the consideration offered and the other material
terms thereof (or the material terms of any amendment
thereto). 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 7.
(g) 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 such adjustment becomes effective and shall
mail such notice of such adjustment of the Conversion Price
to each holder of shares of Series A Preferred Stock at such
holder's last address as shown on the stock records of the
Corporation.
(h) In any case in which paragraph (d) of this
Section 7 provides that an adjustment shall become effective
on the day next following the record date for an event, the
Corporation may defer until the occurrence of such event (A)
issuing to the holder of any share of Series A Preferred
Stock converted after such record date and before the
occurrence of such event the additional Common Stock
issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock
issuable upon such conversion before giving effect to such
adjustment and (B) paying to such holder any amount of cash
in lieu of any fraction pursuant to paragraph (c) of this
Section 7.
(i) There shall be no adjustment of the
Conversion Price in case of the issuance of any capital
stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth
in this Section 7.
(j) If the Corporation shall take any action
affecting the Common Stock, other than action described in
this Section 7, that in the opinion of the Board of
Directors would materially adversely affect the conversion
rights of the holders of Series A Preferred Stock, the
Conversion Price for the Series A Preferred Stock may be
adjusted, to the extent permitted by law, in such manner, if
any, and at such time as the Board of Directors, in its sole
discretion, may determine to be equitable under the
circumstances.
(k) The Corporation shall at all times reserve
and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock solely
for the purpose of effecting conversion of the Series A
Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of
Series A Preferred Stock not theretofore converted into
Common
<PAGE>
Stock. For purposes of this paragraph (k), the number of
shares of Common Stock that shall be deliverable upon the
conversion of all outstanding shares of Series A 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 shares of Common
Stock issued upon conversion of the shares of Series A
Preferred Stock shall be validly issued, fully paid and non-
assessable.
The Corporation shall use its best efforts to list the
shares of Common Stock required to be delivered upon
conversion of the shares of Series A Preferred Stock, prior
to such delivery, upon each national securities exchange, if
any, upon which the outstanding shares of 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 of shares of Series A Preferred Stock are freely
transferable 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)).
(l) The Corporation will pay any and all
documentary stamp or similar issue or transfer taxes payable
in respect of the issue or delivery of shares of Common
Stock or other securities or property on conversion or
redemption of shares of Series A 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 shares of
Common Stock or other securities or property in a name other
than that of the holder of the shares of Series A Preferred
Stock to be converted or redeemed, 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 established, to
the reasonable satisfaction of the Corporation, that such
tax has been paid.
Section 8. Ranking. Any class or series of capital
stock of the Corporation shall be deemed to rank:
(a) prior or senior to the Series A Preferred
Stock, as to the payment of dividends and as to distribution
of assets upon liquidation, dissolution or winding up, if
the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of Series A
Preferred Stock;
<PAGE>
(b) on a parity with the Series A Preferred
Stock, as to the payment of dividends and as to distribution
of assets upon liquidation, dissolution or winding up,
whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be
different from those of the Series A Preferred Stock, if the
holders of such class of stock or series and the Series A
Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective
amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one
over the other ("Parity Stock"); and
(c) junior to the Series A Preferred Stock, as to
the payment of dividends or as to the distribution of assets
upon liquidation, dissolution or winding up, if such stock
or series shall be Common Stock or if the holders of Series
A Preferred Stock shall be entitled to receipt of dividends
or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to
the holders of shares of such class or series ("Junior
Stock").
Section 9. Voting.
(a) If and whenever (i) six quarterly dividends
(whether or not consecutive) payable on the Series A
Preferred Stock or any series or class of Parity Stock shall
be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been
paid in full), whether or not earned or declared, or (ii)
the consolidated shareholders' equity of the Corporation
(determined in accordance with generally accepted accounting
principles and giving effect to any adjustment for the net
unrealized gain or loss on available-for-sale mortgage
securities) at the end of any calendar quarter is less than
Eighty Million Dollars ($80,000,000), the number of
directors then constituting the Board of Directors shall be
increased by two (if not already increased by reason of a
similar arrearage with respect to any Parity Stock) and the
holders of shares of Series A Preferred Stock, together with
the holders of shares of every other series of Parity Stock
(any other such series, the "Voting Preferred Stock"),
voting as a single class regardless of series, shall be
entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders
or special meeting held in place thereof, or at a special
meeting of the holders of the Series A Preferred Stock and
the Voting Preferred Stock called as hereinafter provided.
Whenever (1) in the case of an arrearage in dividends
described in clause (i), all arrears in dividends on the
Series A Preferred Stock and the Voting Preferred Stock then
outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been paid
or declared and set apart for payment, or (2) in the case of
a shortfall in the Corporation's consolidated shareholders'
equity described in clause (ii), the consolidated
shareholders' equity of the Corporation (determined in
accordance with generally accepted accounting principles and
giving effect to any adjustment for the net unrealized gain
or loss on available-for-sale mortgage securities) at the
end of any subsequent
<PAGE>
calendar quarter equals or exceeds Eighty Million Dollars
($80,000,000), then the right of the holders of the Series A
Preferred Stock and the Voting Preferred Stock to elect such
additional two directors shall cease (but subject always to
the same provision for the vesting of such voting rights in
the case of any similar future arrearages in six quarterly
dividends or shortfall in consolidated shareholders'
equity), and the terms of office of all persons elected as
directors by the holders of the Series A Preferred Stock and
the Voting Preferred Stock shall forthwith terminate and the
number of the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have
been so vested in the holders of Series A Preferred Stock
and the Voting Preferred Stock, the Secretary of the
Corporation may, and upon the written request of any holder
of Series A Preferred Stock (addressed to the Secretary at
the principal office of the Corporation) shall, call a
special meeting of the holders of the Series A Preferred
Stock and of the Voting Preferred Stock for the election of
the two Directors to be elected by them as herein provided,
such call to be made by notice similar to that provided in
the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special
meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any
such request, then any holder of Series A Preferred Stock
may call such meeting, upon the notice above provided, and
for that purpose shall have access to the stock books of the
Corporation. The Directors elected at any such special
meeting shall hold office until the next annual meeting of
the stockholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above
provided. If any vacancy shall occur among the Directors
elected by the holders of the Series A Preferred Stock and
the Voting Preferred Stock, a successor shall be elected by
the Board of Directors, upon the nomination of the then-
remaining Director elected by the holders of the Series A
Preferred Stock and the Voting Preferred Stock or the
successor of such remaining Director, to serve until the
next annual meeting of the stockholders or special meeting
held in place thereof if such office shall not have
previously terminated as provided above.
(b) So long as any shares of Series A Preferred
Stock are outstanding, in addition to any other vote or
consent of stockholders required by law or by the Articles
of Incorporation, as amended, the affirmative vote of at
least 66 2/3% of the votes entitled to be cast by the
holders of the Series A Preferred Stock, given in person or
by proxy, either in writing without a meeting or by vote at
any meeting called for the purpose, shall be necessary for
effecting or validating:
(i) Any amendment, alteration or repeal of
any of the provisions of this amendment to the Articles
of Incorporation, the Articles of Incorporation or the
Bylaws of the Corporation that materially adversely
affects the voting powers, rights or preferences of the
holders of the Series A Preferred Stock; provided,
however, that the amendment of the provisions of the
Articles of Incorporation so as to authorize or create,
or to increase the authorized amount of, any Junior
Stock or any shares of any class ranking on a parity
with the Series A
<PAGE>
Preferred Stock shall not be deemed to materially
adversely affect the voting powers, rights or
preferences of the holders of Series A Preferred Stock;
or
(ii) The authorization or creation of, or the
increase in the authorized amount of, any shares of any
class or any security convertible into shares of any
class ranking prior or senior to the Series A Preferred
Stock in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation or in the
payment of dividends; provided, however, that no such
vote of the holders of Series A Preferred Stock shall
be required if, at or prior to the time when such
amendment, alteration or repeal is to take effect, or
when the issuance of any such prior shares or
convertible security is to be made, as the case may be,
provision is made for the redemption of all shares of
Series A Preferred Stock at the time outstanding.
For purposes of the foregoing provisions of this
Section 9, each share of Series A Preferred Stock shall have
one (1) vote per share, except that when any other series of
preferred stock shall have the right to vote with the Series
A Preferred Stock as a single class on any matter, then the
Series A Preferred Stock and such other series shall have
with respect to such matters one (1) vote per $24.00 of
stated liquidation preference. Except as otherwise required
by applicable law or as set forth herein, the Series A
Preferred Stock shall not have any relative, participating,
optional or other special voting rights and powers other
than as set forth herein, and the consent of the holders
thereof shall not be required for the taking of any
corporate action.
Section 10. Record Holders. The Corporation and the
Transfer Agent may deem and treat the record holder of any
share of Series A Preferred Stock as the true and lawful
owner thereof for all purposes, and neither the Corporation
nor the Transfer Agent shall be affected by any notice to
the contrary.
<PAGE>
EXHIBIT 4.2
NUMBER___ [FACE OF CERTIFICATE] SHARES_____
Resource Mortgage Capital, Inc.
ORGANIZED UNDER THE SEE REVERSE FOR
LAWS OF THE COMMONWEALTH CERTAIN DEFINITIONS
OF VIRGINIA
CUSIP 76121E 20 2
This certifies that [insert name of holder] is the
record holder of FULLY PAID AND NON-ASSESSABLE SHARES OF THE
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK, $.01 PAR
VALUE, OF Resource Mortgage Capital, Inc. transferable on
the books of the Corporation in person or by duly authorized
attorney upon surrender of the certificates properly
endorsed. This Certificate is not valid unless
countersigned by the Transfer Agent and registered by the
Registrar. Witness the facsimile seal of the Corporation
and the facsimile signatures of its duly authorized
officers.
Date: (SEAL)
/s/Thomas H. Potts
President
/s/Lynn K. Geurin
Secretary
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
(SEAL) (Charlotte, North Carolina)
Transfer Agent and Registrar
By:
Authorized Signature
<PAGE>
[REVERSE SIDE OF CERTIFICATE]
TRANSFER RESTRICTIONS
THE TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED. NO TRANSFER MAY BE MADE TO ANY
PERSON (I) WHO IS A NONRESIDENT ALIEN INDIVIDUAL OR FOREIGN
ENTITY, (II) WHO IS AN ENTITY EXEMPT FROM FEDERAL INCOME
TAXATION THAT IS NOT SUBJECT TO TAX ON UNRELATED BUSINESS
TAXABLE INCOME (OR ANY PASS-THROUGH ENTITY IN WHICH SUCH A
TAX-EXEMPT ENTITY HOLDS OR IS PERMITTED TO HOLD AN
INTEREST), OR (III) IF SUCH PERSON OR GROUP OF PERSONS
DIRECTLY OR THROUGH THE OPERATION OF CERTAIN ATTRIBUTION
RULES WOULD OWN IN EXCESS OF 9.8% OF THE CORPORATION'S
OUTSTANDING CAPITAL STOCK AFTER THE TRANSFER.
THE CORPORATION MAY REQUIRE EVIDENCE OF A PROPOSED
TRANSFEREE'S STATUS AND OWNERSHIP INTEREST BEFORE PERMITTING
ANY TRANSFER AND MAY REDEEM ANY SHARES HELD IN VIOLATION OF
THE PRECEDING PARAGRAPH. THE CORPORATION WILL FURNISH TO
ANY STOCKHOLDER WITHOUT CHARGE A FULL STATEMENT OF THE
TRANSFER RESTRICTIONS UPON REQUEST TO THE SECRETARY OF THE
CORPORATION AT ITS PRINCIPAL OFFICE.
THE CORPORATION WILL FURNISH TO THE STOCKHOLDER
INFORMATION REGARDING THE DESIGNATIONS, RELATIVE RIGHTS,
PREFERENCES, AND LIMITATIONS APPLICABLE TO EACH CLASS OF ITS
CAPITAL STOCK ON REQUEST AND WITHOUT CHARGE.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST,
STOLEN, OR DESTROYED THE CORPORATION WILL REQUIRE A BOND OF
INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT
CERTIFICATE.
The following abbreviations, when used in the
inscription on the face of this certificate, shall be
constituted as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--
______Custodian_____
TEN ENT--as tenants by the entireties
(Cust) (Minor)
JT TEN--as joint tenants with right of survivorship
Under Uniform Gift to and not as tenants in
common Minors Act _____
(State)
Additional abbreviations may be used though not in the above
list.
For value received, ____ hereby sell assign an transfer unto
_____________shares of the capital stock represented by the
within Certificate and do hereby irrevocably constitute and
appoint _______ Attorney to transfer the said stock on the
books of the within named Corporation with full power of
substitution in the premises. Dated ____.
<PAGE>
EXHIBIT 5.1
VENABLE, BAETJER AND HOWARD, LLP
Including professional corporations
1800 Mercantile Bank & Trust Building
Two Hopkins Plaza
Baltimore, Maryland 21201-2978
(410) 244-7400, Fax (410) 244-7742
June 26, 1995
Resource Mortgage Capital, Inc.
2800 East Parham Road
Richmond, VA 23228
Re: Registration Statement on Form S-3
(Reg. No. 33-50705)
Ladies and Gentlemen:
We have acted as counsel to Resource Mortgage
Capital, Inc., a Virginia corporation (the "Company"), in
connection with its proposed public offering of 1,350,000
shares of its Series A Cumulative Convertible Preferred
Stock, $0.01 par value ("Series A Preferred Stock") subject
to an option to offer an additional 202,500 shares to cover
over-allotments, if any, pursuant to a Registration
Statement filed on Form S-3 (Registration No. 33-50705)
("Registration Statement"). On June 7, 1995 the Company
filed a prospectus subject to completion with the Securities
and Exchange Commission with respect to the Series A
Preferred Stock (the "Preliminary Prospectus Supplement").
In that connection, we have examined originals or
copies of such documents, corporate records and other
instruments as we have deemed necessary or appropriate for
purposes of this opinion including the Articles of
Incorporation, as amended, By-laws of the Company, and the
proposed Articles of Amendment establishing the Series A
Preferred Stock. We have assumed without independent
<PAGE>
verification the genuineness of signatures, the authenticity
of documents, and the conformity with originals of copies.
Based on the foregoing, we are of the opinion that
the shares of Series A Preferred Stock being sold by the
Company, when issued and sold in accordance with the terms
of the Underwriting Agreement in substantially the same form
filed as Exhibit 1.1 to the Form 8-K filed this day by the
Company with Securities and Exchange Commission ("8-K") and
upon filing with, and acceptance by, the Virginia State
Corporation Commission of the Articles of Amendment
establishing the Series A Preferred Stock, will be validly
issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as an
exhibit to the 8-K and incorporation by reference into the
Registration Statement and to the reference to our firm
under "Legal Opinions" in the Prospectus and "Legal Matters"
in the Preliminary Prospectus Supplement" comprising a part
of the Registration Statement.
By giving the foregoing consent, we do not admit
that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933.
Very truly yours,
VENABLE, BAETJER AND HOWARD, LLP
<PAGE>
EXHIBIT 8.1
VENABLE, BAETJER AND HOWARD, LLP
Including professional corporations
1800 Mercantile Bank & Trust Building
Two Hopkins Plaza
Baltimore, Maryland 21201-2978
(410) 244-7400, Fax (410) 244-7742
June 26, 1995
Resource Mortgage Capital, Inc.
2800 E. Parham Drive
Richmond, Virginia 23228
Re: Tax Opinion
Ladies and Gentlemen:
We have acted as counsel to Resource Mortgage Capital,
Inc. ("RMC") in connection with the preparation of a
registration statement (the "Registration Statement") to be
filed with the Securities and Exchange Commission with respect
to an offering of shares of RMC's convertible preferred stock.
You have requested our opinion regarding RMC's qualification as
a real estate investment trust ("REIT") pursuant to sections 856
through 860 of the Internal Revenue Code of 1986, as amended
(the "Code"), for its 1994 taxable year. Unless otherwise
stated, all section references herein are to the Code. In
addition, you have requested our opinion with respect to whether
RMC's organization and contemplated method of operations are
such as to enable it to continue to qualify as a REIT for its
1995 taxable year and subsequent taxable years.
RMC has a number of wholly-owned subsidiaries
("qualified REIT subsidiaries"), the income, liabilities, and
assets of which are consolidated with those of RMC for federal
income tax purposes. This letter refers to RMC, together with
such subsidiaries, as "Consolidated RMC." In connection with
the opinions rendered below, we have examined the following:
<PAGE>
1. The Articles of Incorporation of RMC, as amended
on August 17, 1992 and the Proposed Articles of Amendment
establishing the convertible preferred stock;
2. The bylaws of RMC as restated on June 22, 1992;
3. Consolidated RMC's federal income tax returns for
its taxable years 1992 and 1993 (but not its 1994 income tax
return which was not filed or prepared as of the date hereof);
and
4. The prospectus included in the registration
statement with which this letter has been filed.
In connection with the opinions rendered below, we have
assumed that:
1. Each of the documents referred to above has been
duly authorized, executed, and delivered, is authentic, if an
original, or accurate, if a copy, and has not been amended;
2. During Consolidated RMC's 1995 taxable year and
subsequent taxable years, it will continue to conduct its
affairs in a manner that will make the representations set forth
below true for such years;
3. Neither RMC nor any subsidiary of RMC will make
any amendments to its organizational documents after the date of
this opinion that would affect Consolidated RMC's qualification
as a REIT for any taxable year; and
4. No actions will be taken by Consolidated RMC or
any subsidiary of RMC after the date hereof that would have the
effect of altering the facts upon which the opinions set forth
below are based.
Furthermore, we have relied upon the correctness of the
following representations of Consolidated RMC and its authorized
representatives that, at all times relevant hereto:
1. Neither RMC nor any subsidiary thereof has ever
been subject by law to the supervision or examination by state,
or federal authorities having supervision over banking
institutions.
<PAGE>
2. Neither RMC nor any subsidiary thereof has ever
been a savings institution chartered or supervised as a savings
and loan or similar association under federal or state law.
3. Neither RMC nor any subsidiary thereof has ever
been a small business investment company operating under the
Small Business Investment Act of 1958.
4. Neither RMC nor any subsidiary thereof was created
by or pursuant to an act of a state legislature for purposes of
promoting, maintaining, and assisting the economy and industry
within a state on a regional or state-wide basis by making loans
to be used in trades or businesses which would generally not be
made by banks within such region or state in the ordinary course
of business.
5. Neither RMC nor any subsidiary thereof was an
insurance company to which Subchapter L of the Code applies.
6. Beneficial ownership of the shares of RMC (the
"Shares") was held by 100 or more persons.
7. At no time during the last half of any taxable
year was more than 50% in value of the outstanding stock of RMC
owned, directly or indirectly, by or for not more than five
individuals. For this purpose, the Shares are treated as owned
indirectly by or for an individual if such individual would be
treated as owning such Shares under section 544 as modified by
section 856(h)(1)(B).
8. Consolidated RMC's election to be treated as a
REIT was properly made and has not been terminated or revoked.
9. At the close of each quarter of each taxable year
seventy-five percent (75%) or more of the value of Consolidated
RMC's total assets consisted of cash and cash items (including
receivables arising in the ordinary course of Consolidated RMC's
operations), government securities, and real estate assets
(including interests in real property, interests in mortgages on
real property, and interests in REMICs to the extent provided in
section 856(c)(6)(E)), and shares or transferable certificates
of beneficial interest in other qualified REITs) (the "75%
test").
<PAGE>
10. Not more than five percent (5%) of the value of
Consolidated RMC's total assets consisted of securities of any
one issuer (if such securities are not includable under the 75%
test), and Consolidated RMC owned not more than ten percent
(10%) of the outstanding voting securities of any one issuer (if
such securities are not includable under the 75% test).
11. Consolidated RMC did not receive or accrue any
rents from either real or personal property.
12. Consolidated RMC did not receive or accrue as
income, directly or indirectly, any interest or other amount
determined in whole or in part with reference to the income or
profits derived by any person (excluding interest (A) based
solely on a fixed percentage or percentages of receipts or sales
or (B) to the extent described in section 856(f)(2) of the
Code).
13. Consolidated RMC did not own any mortgage whose
terms entitled it to receive a specified portion of any gain
realized on the sale or exchange of the real property securing
the mortgage or any gain that would be realized if such property
were sold on a specified date.
14. At least seventy-five percent (75%) of
Consolidated RMC's gross income (excluding gross income from
prohibited transactions) for any taxable year was derived from:
(a) interest on obligations secured by mortgages
on real property or on interests in real property,
(b) gain from the sale or other disposition of
real property (including interests in real property and
interests in mortgages on real property) which was not held as
inventory or primarily for sale to customers in the ordinary
course of its trade or business,
(c) dividends or other distributions on, and gain
(other than gain from prohibited transactions) from the sale or
other disposition of, transferable shares (or transferable
certificates of beneficial interest) in other REITs,
(d) abatements and refunds of taxes on real
property,
(e) income and gain derived from foreclosure
property,
<PAGE>
(f) amounts (other than amounts the determination
of which depends in whole or in part on the income or profits of
any person) received or accrued as consideration for entering
into agreements (i) to make loans secured by mortgages on real
property or on interests in real property, or (ii) to purchase
or lease real property (including interests in real property and
interests in mortgages on real property),
(g) gain from the sale or other disposition of
real estate assets which is not a prohibited transaction solely
by reason of section 857(b)(6), and
(h) income which was attributable to stock or
debt instruments acquired through the temporary investment of
new capital and received or accrued during the one year period
beginning on the date on which Consolidated RMC received such
capital.
15. At least ninety-five percent (95%) of Consolidated
RMC's gross income (excluding gross income from prohibited
transactions) for any taxable year was derived from:
(a) sources which satisfy the seventy-five
percent (75%) income test described in paragraph 14 above,
(b) dividends,
(c) interest,
(d) payments with respect to bona fide interest
rate swap, cap, or floor agreements entered into to hedge any
variable interest rate indebtedness incurred or to be incurred
to acquire or carry real estate assets ("interest rate
agreements"), and
(e) gain from the sale or other disposition of
stocks and securities (including interest rate agreements).
16. Less than thirty percent (30%) of Consolidated
RMC's gross income for any taxable year was derived from the
sale or other disposition of:
(a) stock or securities (including interest rate
agreements) held for less than one year,
(b) property in a transaction which is a
prohibited transaction, and
<PAGE>
(c) real property (including interests in real
property and interests in mortgages on real property) held for
less than four years other than (i) property compulsorily or
involuntarily converted within the meaning of section 1033, and
(ii) property which is foreclosure property.
17. For each taxable year, the deduction for dividends
paid during the taxable year (determined without regard to
capital gains dividends) equaled or exceeded (i) the sum of
ninety-five percent (95%) of Consolidated RMC's real estate
investment trust taxable income for the taxable year (determined
without regard to the deduction for dividends paid and excluding
any net capital gains), and ninety-five percent (95%) of the
excess of the net income from foreclosure property over the tax
imposed on such income by section 857(b)(4)(A), minus (ii) any
excess noncash income as determined under section 857(e).
18. All distributions paid by Consolidated RMC with
respect to its Shares were pro rata with no preference to any
share of stock as compared to any other shares of the same class
and with no preference to one class of stock as compared to
another class.
19. As of the close of any taxable year, Consolidated
RMC had no earnings and profits accumulated in any non-REIT
year.
20. During its taxable year 1994, RMC has had at least
2001 shareholders of record of its Shares on any dividend record
date. In prior taxable years, RMC had at least 201 shareholders
of record of its Shares in any dividend record date.
21. Within thirty (30) days after the end of each
taxable year, RMC demanded written statements from shareholders
of record who at any time during the last six (6) months of
RMC's taxable year owned 5% (or 1%, as the case may be), or more
of the Shares disclosing (i) the actual owners of the Shares
(those persons required to include RMC's dividends in gross
income), (ii) and the maximum number of Shares (including the
number and face value of securities convertible into Shares)
that were considered owned, directly or indirectly (within the
meaning of section 544 as modified by section 856(h)(1)(B)) by
each of the actual owners of the Shares.
22. RMC maintained the information received with
respect to such written demands in its filing district available
for inspection by the Internal Revenue Service at any time.
<PAGE>
23. RMC maintained sufficient records to show that it
complied with the 75% test described at paragraph 9 above for
all taxable years in its filing district available for
inspection by the Internal Revenue Service at any time.
24. RMC and the plan administrator under RMC's
Dividend Reinvestment and Stock Purchase Plan (the "Plan") have
administered the Plan in accordance with the terms of the
prospectus describing the Plan.
25. RMC has owned all the stock of each qualified REIT
subsidiary at all times during the period of such corporation's
existence.
26. During its 1995 taxable year and subsequent
taxable years, Consolidated RMC expects to continue to satisfy
all of the representations described in paragraphs 1 through 24
above.
As used herein, the term "prohibited transaction" means
the sale or other disposition of property held as inventory or
primarily for sale to customers in the ordinary course of
Consolidated RMC's trade or business. The term "foreclosure
property" means any real property (including interests in real
property) and any personal property incident to such real
property, acquired by Consolidated RMC as the result of its
having bid in such property at foreclosure, or having otherwise
reduced such property to ownership or possession by agreement or
process of law after there was a default (or default was
imminent) on a lease of such property or on an indebtedness
which such property secured. Such term does not include
property acquired by Consolidated RMC as a result of
indebtedness arising from the sale or other disposition of
property held as inventory or for sale in the ordinary course of
Consolidated RMC's trade or business which was not originally
acquired as foreclosure property.
Based solely on the documents, assumptions, and
representations set forth above, and without further
investigation, we are of the opinion that Consolidated RMC
qualified as a REIT in its 1994 taxable year and that its
organization and contemplated method of operation are such that
it will continue to so qualify for its 1995 taxable year and
subsequent taxable years. Except as described herein we have
performed no further due diligence and have made no efforts to
verify the accuracy or genuineness of the documents,
assumptions, and representations set forth above.
<PAGE>
The foregoing opinion is based on current provisions of
the Code and Treasury Regulations, published administrative
interpretations thereof, and published court decisions. The
Internal Revenue Service has not yet issued Regulations or
administrative interpretations with respect to various
provisions of the Code relating to REIT qualification. No
assurance can be given that the law will not change in a way
that will prevent Consolidated RMC from qualifying as a REIT or
that the Internal Revenue Service will not disagree with this
opinion.
The foregoing opinion is limited to federal income tax
matters addressed herein, and no other opinions are rendered
with respect to other federal tax matters or any issues arising
under the tax laws of any state or locality. We undertake no
obligation to update this opinion after the date of this letter.
This opinion letter is solely for the information and use of the
addressee and may not be relied upon, quoted, or otherwise used
for any purpose by any other person without our express written
consent.
We consent to the references to this firm in the
prospectus supplement to be filed and the prospectus filed with
the Registration Statement and to the filing of this opinion as
an exhibit to the Registration Statement in which the prospectus
is and prospectus supplement will be included. We do not
thereby admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities
and Exchange Commission thereunder.
Very truly yours,
VENABLE, BAETJER AND HOWARD, LLP
<PAGE>
EXHIBIT 12.1
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED CHARGES
Qtr ended
March 31, Year ended
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Net earnings as reported 6,59615,500 52,257 54,127 38,169
21,636 12,793
Costs and taxes6,284459(2,577) 3,164 7,048 3,828 711
Fixed Charges
CMO 8,258 8,04031,458 37,198 55,376 85,622
98,856
Less Nonrecourse CMO(7,157)(8,040)(31,146)(37,198)(55,376)
(85,622) (98,856)
Repo40,599 26,883134,79174,822 47,828 29,352
14,597
Notes 2,722 770 6,189 4,299 4,727 6,901
5,580
Comm. paper 803 1,986 3,465 3,786 756
0
Total44,422 28,456143,27882,586 56,341 37,009
20,177
Net earnings
(excluding fixed charges
and taxes)57,302 44,415192,958139,877101,55862,473
33,681
RATIO 1.29 1.56 1.35 1.69 1.80 1.69 1.67
</TABLE>
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
The Board of Directors
Resource Mortgage Capital, Inc.:
We consent to the use of our reports incorporated in the
registration statement on Form S-3 (Registration No. 33-50705) and
to the reference to our firm under the heading "Experts" in the
prospectus.
KPMG PEAT MARWICK LLP
Richmond, Virginia
June 26, 1995
