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: October 9, 1996):
October 11, 1996
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)
4880 Cox Road, Glen Allen, Virginia 23060
(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)
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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 February 2, 1994, to supply information omitted from
Item 14 of the above described Registration Statement (Attached as Annex
A).
Item 7. Exhibits.
(c). Exhibits.
1.1 Underwriting Agreement.
4.1 Form of Amendment to Articles of Incorporation establishing
Series C Cumulative Convertible Preferred Stock.
4.2 Form of Certificate for the Series C Cumulative Convertible
Preferred Stock.
4.3 Form of Amendment to Articles of Incorporation regarding par
value of the Company's 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).
99.1 Consolidated Balance Sheets at September 30, 1996 and
December 31, 1995 and Consolidated Statements of
Operations for the quarters and nine months ended
September 30, 1996 and 1995.
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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.
Date: October 11, 1996 RESOURCE MORTGAGE CAPITAL, INC.
By: /s/ Thomas H. Pott
Thomas H. Potts
President
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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:
Registration Fee $21,000
Legal Fees and Expenses 50,000
Accounting Fees and Expenses 35,000
Blue Sky Qualification and Expenses including 5,000
Counsel Fees
New York Stock Exchange Listing Fee 1,500
Nasdaq/NMS Entry and Listing Fees 1,000
NASD Fee 5,000
Printing and Engraving Expenses 32,000
Transfer and Registrar Fees 7,500
Miscellaneous 2,000
TOTAL 160,000
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EXHIBIT INDEX
Exhibit Page
1.1 Underwriting Agreement 6
4.1 Form of Amendment to Articles of Incorporation
establishing Series C Cumulative Convertible
Preferred Stock 23
4.2 Form of Certificate for the Series C Cumulative
Convertible Preferred Stock. 45
4.3 Form of Amendment to Articles of Incorporation
regarding par value of the Preferred Stock 47
5.1 Legal Opinion of Venable, Baetjer and Howard, LLP. 48
8.1 Tax Opinion of Venable, Baetjer and Howard, LLP. 50
12.1 Ratio of Available Earnings to Fixed Charges. 57
23.1 Consent of KPMG Peat Marwick LLP. 58
23.2 Consent of Venable, Baetjer and Howard, LLP
(contained in Exhibits 5.1 and 8.1 filed herewith) - - -
99.1 Consolidated Balance Sheets at September 30, 1996 and
December 31, 1995 and Consolidated Statements
of Operations for the periods ended September 30,
1996 and 1995. 59
EXHIBIT 1.1
1,600,000 Shares
RESOURCE MORTGAGE CAPITAL, INC.
Series C 9.73% Cumulative Convertible Preferred Stock
UNDERWRITING AGREEMENT
October 9, 1996
St. Louis, Missouri
TO: STIFEL, NICOLAUS & COMPANY, INCORPORATED
as Representative of the several Underwriters
named in Schedule I hereto
500 North Broadway
St. Louis, Missouri 63102
Ladies and Gentlemen:
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 C 9.73% 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
the number of additional shares of the Stock set forth in Schedule I hereto
(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 respective purchase obligation of each
Underwriter with
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respect to the Option Stock shall be adjusted by the Representative so that
no Underwriter shall be obligated to purchase Option Stock other than in
round lots. The price paid by the Underwriters for both the Firm Stock and
any Option Stock shall be $28.73 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.
(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
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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, as amended
(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 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
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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 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
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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 two 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.
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 over-allotment option granted herein 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
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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 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.
<PAGE>
(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.
(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 later of the Closing
Date or the Second 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 and the Company may issue Common Stock issuable
upon the conversion of the Company's Series A 9.75% Cumulative
Convertible Preferred Stock, Series B 9.55% Cumulative
Convertible Preferred Stock or other outstanding 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
<PAGE>
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
opinion, dated the Second Closing Date, to the extent applicable,
in the event of the Second Closing Date, to the effect that:
(i) The Company, each of Issuer Holding Corp. and
MERIT Securities Corporation (individually, a "Subsidiary"
and collectively, the "Subsidiaries"), and each of SMFC
Holding, Inc., SMFC Funding Corporation, Dynex Holding,
Inc., Multi-Family Capital Markets, Inc. and Dynex
Financial, 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 and where the failure to so qualify would
have a material adverse effect on the Company and its
subsidiaries and affiliates taken as a whole;
(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,
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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 counsel's knowledge, after due inquiry, any
other security interests, claims, liens or encumbrances.
(iii) Upon the issuance by the State Corporation
Commission for the Commonwealth of Virginia of the
certificates of amendment relating to the Articles of
Amendment to the Company's Articles of Incorporation filed
with said Commission on October 9 and 10, 1996, 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 the Agreement, will be fully
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 Nasdaq National Market; the certificates
for the 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, to counsel's
knowledge, other rights to subscribe for the Preferred Stock
or the underlying Common Stock;
(iv) To counsel's knowledge, 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, to counsel's knowledge, 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 that have not
been so described or filed; 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;
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(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); 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;
(vi) The 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 Exchange Act
and the certificates of amendment to be issued by the State
Corporation Commission of the Commonwealth of Virginia with
respect to the Articles of Amendment to the Company's
Articles of Incorporation filed with said Commission on
October 9 and 10, 1996. Such counsel need express no
opinion as to the requirements of the National Association
of Securities Dealers, Inc. with respect to the
participation by the Underwriters in the offering or state
securities or "blue sky" matters;
(viii) Assuming the issuance by the Corporation
Commission of the Commonwealth of Virginia of the
certificates of amendment with respect to the Articles of
Amendment to the Company's Articles of Incorporation filed
with said Commission on October 9 and 10, 1996, neither the
issue and sale of the Preferred Stock by the Company, nor
the consummation of the transactions contemplated by the
Agreement nor the fulfillment of the terms thereof 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
<PAGE>
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) To counsel's knowledge, no holders of securities
of the Company have rights to the registration of such
securities under the Registration Statement;
(x) The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940; and
(xi) The statements contained under "Federal Income
Tax Considerations" in the Basic Prospectus and the Final
Prospectus, insofar as they describe Federal statutes, rules
and regulations, constitute a fair summary thereof.
(xii) On October 9 and 10, 1996, the Company filed
with the State Corporation Commission for the Commonwealth
of Virginia Articles of Amendment to the Company's Articles
of Incorporation relating to the Preferred Stock (the
"Articles Amendment"). The Articles of Amendment complied
in form and substance with the requirements of the Virginia
Stock Corporations Act, and the issuance of the Preferred
Stock has been duly and validly adopted and approved by the
Board of Directors of the Company. No further approval or
action by the Company is required in connection with the
issuance of a certificate of amendment relating to the
Articles Amendment, and nothing has come to counsel's
attention which would act to delay or prevent the issuance
of such certificate of amendment.
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 (x) only, certificates of certain third parties. 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. Such counsel shall also confirm in
such opinion that such counsel has no reason to believe without
independent verification that at the Effective Date the
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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 statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) The Representative shall have received from Thompson
Coburn, 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
a 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;
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(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 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
<PAGE>
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
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.
<PAGE>
(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 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 cancelled 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.
<PAGE>
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 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.
<PAGE>
(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 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.
<PAGE>
(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 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).
<PAGE>
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 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 nondefaulting
Underwriters do not purchase all the Preferred Stock, this Agreement will
terminate without liability to any nondefaulting 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 nondefaulting 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 Nasdaq National
Market shall have been suspended or limited or minimum prices shall have
been established on either the New York Stock Exchange or the Nasdaq
National Market, (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).
<PAGE>
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.
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 63102; or, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at 4880 Cox Road, Glen
Allen, Virginia 23060.
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.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]
<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/ Thomas H. Potts
Name: Thomas H. Potts
Title: President
CONFIRMED AND ACCEPTED
as of the date first above written:
STIFEL, NICOLAUS & COMPANY, INCORPORATED
By: /S/ Rick E. Maples
Name: Rick E. Maples
Title: Senior Vice President
For itself and as Representative of the several
Underwriters, named in Schedule I hereto
<PAGE>
SCHEDULE I
Amount and Purchase Price of Series C 9.73% Cumulative
Convertible Preferred Stock:
Number of shares--Firm Stock: 1,600,000 shares
Purchase price per share: $28.73
Closing Date, Time and Location:
October 16, 1996, 9:00 a.m.
Venable, Baetjer and Howard, LLP
1800 Mercantile Bank and Trust Building
Two Hopkins Plaza
Baltimore, Maryland 21201
Number of shares of Option Stock subject
to 30-day option (ending November 8, 1996)
to purchase at same price with same
underwriting discount to cover
over-allotments: 240,000 shares
Underwriters Number of Shares
Stifel, Nicolaus & Company, Incorporated ..................312,500
Robert W. Baird & Co. Incorporated ........................312,500
EVEREN Securities, Inc. ...................................312,500
Scott & Stringfellow, Inc. ................................312,500
A.G. Edwards & Sons, Inc. .................................50,000
PaineWebber Incorporated ..................................50,000
Stephens Inc. .............................................50,000
Advest, Inc. ..............................................20,000
J.C. Bradford & Co. .......................................20,000
Friedman, Billings, Ramsey & Co., Inc. ....................20,000
Morgan Keegan & Company, Inc. .............................20,000
Piper Jaffray Inc. ........................................20,000
Pincipal Financial Securities, Inc. .......................20,000
Rauscher Pierce Refsnes, Inc. .............................20,000
The Robinson-Humphrey Company, Inc. .......................20,000
Sutro & Co. Incorporated ..................................20,000
Wedbush Morgan Securities ............................ 20,000
TOTAL 1,600,000
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 IIIC shall be inserted following the existing text of
Article IIIB and shall read as set forth in Exhibit A hereto.
3. This Amendment to the Articles of Incorporation was duly adopted by
the Board of Directors of the Corporation at a meeting held on July 30,
1996. 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: October 9, 1996 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 C 9.73% Cumulative
Convertible Preferred Stock (the "Series C Preferred Stock") and up to One
Million Eight Hundred Forty Thousand (1,840,000) shall be the number of
shares of such Preferred Stock constituting such series.
Section 2. Definitions. For purposes of the Series C 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 C
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 C Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to
paragraph (d) of Section 7. The initial Conversion Price shall be
$30.00 (equivalent to an initial conversion rate of one share of
Common Stock for each share of Series C 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
<PAGE>
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 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 last day of January, April, July and October, in each
year, commencing on January 31, 1997 with respect to the period
commencing on the date of issue and ending December 31, 1996;
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 December 31, 1996).
"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
<PAGE>
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.
"Issue Date" shall mean October 16, 1996.
"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 C 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. Series A Preferred Stock and Series B Preferred
Stock are Parity Stock.
"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 mean the Series A Cumulative
Convertible Preferred Stock of the Corporation as set forth in Article
IIIA, Section 1 of the Corporation's Articles of Incorporation (as
amended).
"Series B Preferred Stock" shall mean the Series A Cumulative
Convertible Preferred Stock of the Corporation set forth in Article
IIIB, Section 1 of the Corporation's Articles of Incorporation (as
amended).
"Series C 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
<PAGE>
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 C 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.
"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 C
Preferred Stock.
"Voting Preferred Stock" shall have the meaning set forth in Section 9
hereof.
Section 3. Dividends.
(a) The holders of Series C 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 C Preferred Stock equal to the greater of (i)
the base dividend of $0.73 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 C Preferred Stock is convertible.
The initial Dividend Period shall commence on the Issue Date and end on
December 31, 1996. The dividends payable with respect to the portion of
the initial Dividend Period commencing on the Issue Date and ending on
December 31, 1996, shall be prorated from the date of issuance and
determined by reference to the Base Rate. The amount referred to in clause
<PAGE>
(ii) of this paragraph (a) with respect to each Dividend Period shall be
determined by multiplying the number of shares of Common Stock, or portion
thereof calculated to the fourth decimal point, into which a share of
Series C Preferred Stock would be convertible at the close of business on
the record date for the payment of dividends on the Series C Preferred
Stock (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
C 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 Series C 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.
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
$0.7675 per quarter 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
<PAGE>
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 C
Preferred Stock for the portion of the initial Dividend Period commencing
on the Issue Date and ending and including December 31, 1996, 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 C
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 C 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 C Preferred Stock that may be in arrears.
(c) So long as any of the shares of Series C 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 C 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 C 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 C Preferred Stock and accumulated, accrued
and unpaid on such Parity Stock.
(d) So long as any of the shares of Series C 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 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
<PAGE>
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 C
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 C 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 C
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 C Preferred Stock shall be entitled to receive Thirty
Dollars ($30.00) per share of Series C 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 C 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
C 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 C Preferred Stock and any such
other Parity Stock ratably in the same proportion as the respective amounts
that would be payable on such Series C 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 one or more corporations, (ii) a sale or transfer of all
<PAGE>
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 C
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 C
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 C Preferred Stock shall not be redeemable
by the Corporation prior to September 30, 1999. On and after September 30,
1999, the Corporation, at its option, may redeem shares of Series C
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 C Preferred Stock may be redeemed, in
whole or in part, at the option of the Corporation, at any time on or
after September 30, 1999 by issuing and delivering to each holder for
each share of Series C Preferred Stock to be redeemed such number of
authorized but previously unissued shares of Common Stock as equals
the Liquidation Preference (which excludes any accumulated, accrued
and unpaid dividends which are to be paid in cash as provided below)
per share of Series C 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 C 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 July 31, 1999. The Press Release shall announce the
<PAGE>
redemption and set forth the number of shares of Series C Preferred
Stock that the Corporation intends to redeem; or
(ii) Shares of Series C Preferred Stock may be redeemed, in
whole or in part, at the option of the Corporation at any time on or
after September 30, 1999 out of funds legally available therefor at a
redemption price payable in cash equal to $30.00 per share of Series C
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 C 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 C 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 C 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 C 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
<PAGE>
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 C 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 accumulated or accrued dividends on
shares of Series C 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 C 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 C Preferred Stock may be redeemed unless all
outstanding shares of Series C Preferred Stock are simultaneously redeemed
and neither the Corporation nor any affiliate of the Corporation may
purchase or acquire shares of Series C Preferred Stock, otherwise than
pursuant to a purchase or exchange offer made on the same terms to all
holders of shares of Series C Preferred Stock.
(d) If the Corporation shall redeem shares of Series C 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; if the
Corporation shall redeem shares of Series C Preferred stock pursuant to
paragraph (a)(ii) of this Section 5, notice of such redemption shall be
given not less than thirty (30) nor more than sixty (60) days prior to the
Call Date. 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 C 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
<PAGE>
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 C 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 C 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 C Preferred
Stock so called for redemption shall cease to accumulate or accrue on the
shares of Series C Preferred Stock 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 C 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 C 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 C 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 C 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 C Preferred Stock are to be converted at
redemption, regardless of whether such holder has surrendered the
<PAGE>
certificates representing the shares of Series C Preferred Stock to be so
redeemed. No interest shall accrue for the benefit of the holders of
shares of Series C 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 C 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 C
Preferred Stock are to be redeemed, shares to be redeemed shall be selected
by the Corporation from outstanding shares of Series C Preferred Stock not
previously called for redemption by lot or, with respect to the number of
shares of Series C 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 C Preferred Stock represented by any
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 C Preferred Stock. Instead of any
fractional interest in a share of Common Stock that would otherwise be
deliverable upon redemption of shares of Series C 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 C 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 C Preferred Stock shall be
validly issued, fully paid and non-assessable. The Corporation shall use
<PAGE>
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 C 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 C 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 C
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 C 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 C 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 C Preferred Stock shall have the right to
convert all or a portion of such shares into shares of Common Stock, as
follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, a holder of shares of Series C 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 C 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 C 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.
<PAGE>
(b) In order to exercise the conversion right, the holder of
each share of Series C 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 C 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 C 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 C 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 C 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 C 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.
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 C 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
<PAGE>
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 C Preferred Stock and Common Stock do
not coincide, and the preceding sentence does not operate to ensure that a
holder of shares of Series C Preferred Stock whose shares are converted
into Common Stock does not receive dividends on both the shares of Series C
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 C 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 C 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 C 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 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 C 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
<PAGE>
receive after the happening of any of the events described above had
such share of Series C 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
C 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,
<PAGE>
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 C 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 the successor or purchasing entity, as
the case may be, for the benefit of the holders of the Series C Preferred
Stock that will contain provisions enabling the holders of the Series C
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 C Preferred
Stock at such holder's address as shown on the stock records of the
<PAGE>
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 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 C 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 C
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.
<PAGE>
(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 C Preferred Stock, the
Conversion Price for the Series C 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 C Preferred Stock, the full number of shares of
Common Stock deliverable upon the conversion of all outstanding shares of
Series C Preferred Stock not theretofore converted into Common 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 C 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 C 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 C 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 C
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
<PAGE>
of shares of Common Stock or other securities or property on conversion or
redemption of shares of Series C 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 C 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 C 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 C Preferred Stock;
(b) on a parity with the Series C 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 C Preferred Stock, if the holders of
such class of stock or series and the Series C 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 C 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 C 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").
<PAGE>
Section 9. Voting.
(a) If and whenever (i) six quarterly dividends (whether or not
consecutive) payable on the Series C 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 150% of the aggregate Liquidation
Preference (excluding any accumulated, accrued and unpaid dividends) of the
then outstanding Series C Preferred Stock and aggregate liquidation
preference (excluding any accumulated, accrued and unpaid dividends) of the
then outstanding Series A Preferred Stock and Series B Preferred Stock, the
number of directors then constituting the Board of Directors shall be
increased by two (if not already increased by reason of similar types of
provisions with respect to Voting Preferred Stock (as defined below)) and
the holders of shares of Series C 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 C Preferred Stock and the Voting Preferred Stock called as
hereinafter provided. Notwithstanding anything herein to the contrary, if
any class or series of Voting Preferred Stock (with which the Series C
Preferred Stock is entitled to vote as a single class) is entitled to elect
two directors as a result of a failure to maintain a specified level of
consolidated shareholders' equity required by the terms of such Voting
Preferred Stock, then when such entitlement is triggered, the separate
entitlement to elect two directors pursuant to Section 9(a)(ii) hereof
shall be suspended. Whenever the entitlement pursuant to Section 9(a)(ii)
of the Series C Preferred Stock (together with holders of Voting Preferred
Stock voting as a single class regardless of series) to vote is suspended
as described in the preceding sentence, the terms of office of all persons
elected as directors pursuant to Section 9(a)(ii) shall terminate upon the
election of the two directors elected pursuant to a vote of the Series C
Preferred Stock and Voting Preferred Stock voting as a single class as a
result of a failure to maintain a specified level of consolidated
shareholders' equity required by the terms of such class or series of
Voting Preferred Stock. Whenever (1) in the case of an arrearage in
dividends described in clause (i), all arrears in dividends on the Series C
Preferred Stock and the Voting Preferred Stock then outstanding shall have
<PAGE>
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 calendar quarter equals or exceeds 150% of the aggregate
Liquidation Preference (excluding any accumulated, accrued and unpaid
dividends) of the then outstanding Series C Preferred Stock and the
aggregate liquidation preference (excluding any accumulated, accrued and
unpaid dividends) of the then outstanding Series A Preferred Stock and
Series B Preferred Stock, then the right of the holders of the Series C
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 C 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 C Preferred Stock and the Voting
Preferred Stock, if applicable, the Secretary of the Corporation may, and
upon the written request of any holder of Series C Preferred Stock
(addressed to the Secretary at the principal office of the Corporation)
shall, call a special meeting of the holders of the Series C 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 C 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 C 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 C Preferred Stock and the Voting Preferred Stock
or the successor of such remaining Director, to serve until the next annual
<PAGE>
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 C 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 C 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 C 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 C Preferred Stock shall not be deemed to materially
adversely affect the voting powers, rights or preferences of the
holders of Series C 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 C 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 C 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 C Preferred Stock at the time
outstanding.
For purposes of the foregoing provisions of this Section 9, each share
of Series C 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 C Preferred Stock as a single class on any matter, then the
Series C Preferred Stock and such other series shall have with respect to
such matters one (1) vote per $30.00 of stated liquidation preference1.
Except as otherwise required by applicable law or as set forth herein, the
Series C Preferred Stock shall not have any relative,
<PAGE>
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 C
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.
_______________________________
1 The Series B Amendment says "one vote per $24.50 of stated liquidation
preference." Do they have to be the same amount?
EXHIBIT 4.2
NUMBER ____ [FACE OF CERTIFICATE] SHARES ____
Resource Mortgage Capital, Inc.
INCORPORATED UNDER THE SEE REVERSE FOR
LAWS OF THE COMMONWEALTH CERTAIN DEFINITIONS
OF VIRGINIA
CUSIP 762121E 40 0
This certifies that [insert name of holder] is the record holder of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE SERIES C CUMULATIVE CONVERTIBLE
PREFERRED STOCK OF RESOURCE MORTGAGE CAPITAL, INC. transferable on the
books of the Corporation in person or by duly authorized attorney upon
surrender of this Certificate 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.
Dated: (SEAL)
/s/Thomas H. Potts
President
/s/Lynn K. Guerin
Secretary
Countersigned and Registered:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
(SEAL) (Charlotte, North Carolina)
By: __________________________________________________
Transfer Agent and Registrar
__________________________________________________
Authorized Signature
[REVERSE SIDE OF CERTIFICATE]
TRANSFER RESTRICTIONS
<PAGE>
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 CERTIFICATION 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 and 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 ________________.
EXHIBIT 4.3
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
RESOURCE MORTGAGE CAPITAL, INC.
1. The name of the Corporation is Resource Mortgage Capital, Inc.
2. The first sentence of the second paragraph of Article III shall be
deleted and in place thereof shall be the following sentence:
The number of shares of Preferred Stock that the
Corporation shall have authority to issue shall be
50,000,000 shares of Preferred stock with the par value of
$0.01 each.
3. This Amendment to the Articles of Incorporation was duly adopted by
the Board of Directors of the Corporation by unanimous consent dated
October 4, 1996. In accordance with Sections 13.1-706.4 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.
Dated: October 8, 1996 RESOURCE MORTGAGE CAPITAL, INC.
By: /S/ THOMAS H. POTTS
Thomas H. Potts
President
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
October 10, 1996
Resource Mortgage Capital, Inc.
4880 Cox Road
Glen Allen, VA 23060
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 1,600,000 shares of its Series C Cumulative Convertible
Preferred Stock, $0.01 par value ("Series C Preferred Stock") subject to an
option to offer an additional 240,000 shares to cover over-allotments, if
any, pursuant to a Registration Statement filed on Form S-3 (Registration
No. 33-50705) ("Registration Statement"). On October 10, 1996, the Company
filed a final prospectus supplement (the "Prospectus Supplement") to the
Prospectus dated September 16, 1996 ("Prospectus") with the Securities and
Exchange Commission with respect to the Series C Preferred Stock.
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 C Preferred Stock.
We have assumed without independent verification the genuineness of
signatures, the authenticity of documents, and the conformity with
originals of copies.
<PAGE>
Based on the foregoing, we are of the opinion that the shares of
Series C 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 the 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 C 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
Form 8-K, the incorporation by reference of this opinion into the
Registration Statement and the reference to our firm under "Legal
Opinions" in the Prospectus and "Legal Matters" in the 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
EXHIBIT 8.1
October 10, 1996
Resource Mortgage Capital, Inc.
4880 Cox Road
Glen Allen, Virginia 23060
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 1995 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 1996 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:
1. The Articles of Incorporation of RMC, as amended on August 17,
1994 and the Articles of Amendment establishing the Series C 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 1994 and 1995; and
4. The prospectus included in the registration statement with which
this letter has been filed.
<PAGE>
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 1996 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.
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.
<PAGE>
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").
10. With respect to any consumer installment loans on manufactured
housing, which are assets of Consolidated RMC as described in paragraph 9
immediately above, that the associated manufactured housing units are secured
to a site and are inherently permanent structures.
11. 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).
12. Consolidated RMC did not receive or accrue any rents from either
real or personal property.
13. 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).
14. 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
<PAGE>
of the real property securing the mortgage or any gain that would be realized
if such property were sold on a specified date.
15. 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 (including
consumer installment loans on manufactured housing) 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,
(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.
16. 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:
<PAGE>
(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).
17. 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
(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.
18. 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).
19. 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 (other than as
required under the Amended Articles of Incorporation of RMC between its common
and preferred stock) to one class of stock as compared to another class.
<PAGE>
20. As of the close of any taxable year, Consolidated RMC had no
earnings and profits accumulated in any non-REIT year.
21. During its taxable year 1995, 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.
22. 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.
23. 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.
24. 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.
25. 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.
26. RMC has owned all the stock of each qualified REIT subsidiary at
all times during the period of such corporation's existence.
27. During its 1996 taxable year and subsequent taxable years,
Consolidated RMC expects to continue to satisfy all of the representations
described in paragraphs 1 through 25 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
<PAGE>
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 1995 taxable year and that its
organization and contemplated method of operation are such that it will
continue to so qualify for its 1996 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.
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
<PAGE>
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
EXHIBIT 12.1
RATIO OF AVAILABLE EARNINGS TO FIXED CHARGES AND RATIO OF AVAILABLE
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
Six
Months Year Ended
Ended
June 1995 1994 1993 1992 1991
1996
<S> <C> <C> <C> <C> <C> <C>
Net income before
income taxes $38,588 $41,933 $49,68 $57,29 $45,21 $25,4
0 1 7 64
Fixed charges (interest
expense, net of non-
recourse interest
expense, other CMO 72,644 162,762 143,27 82,586 56,341 37,00
expenses and provision 8 9
for losses)
Total Available $111,232 $204,69 $192,9 $139,8 $101,5 $62,4
Earnings (as defined) 5 58 77 88 73
Preferred Stock $4,386 $2,746 - - - -
Dividend Requirements
Ratio of Available
Earnings 1.53:1 1.26:1 1.35:1 1.69:1 1.80:1 1.69:
to Fixed Charges 1
Ratio of Available
Earnings to Combined
Fixed Charges and 1.50:1 1.25:1 1.35:1 1.69:1 1.80:1 1.69:
Preferred Stock 1
Dividends
</TABLE>
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
September 16, 1996
EXHIBIT 99.1
<TABLE>
<CAPTION>
RESOURCE MORTGAGE CAPITAL, INC.
Consolidated Balance Sheets
(Thousands except share data)
September 30, December 31,
1996 1995
< <C> <C>
S
>
A
S
S
E
T
S
I
n
v
e
s
t
m
e
n
t
s
:
M
o
r
t
g
a
g
e
i
n
v
e
s
t
m
e
n
t
s
:
Collateral for CMOs $2,894,434 1,028,935
Mortgage securities 1,340,400 2,149,416
M 190,253 247,633
o
r
t
g
a
g
e
l
o
a
n
s
i
n
w
a
r
e
h
o
u
s
e
N 47,500 -
o
t
e
r
e
c
e
i
v
a
b
l
e
4,472,587 3,425,984
C 13,752 22,229
a
s
h
A 10,104 14,851
c
c
r
u
e
d
i
n
t
e
r
e
s
t
r
e
c
e
i
v
a
b
l
e
O 16,946 26,974
t
h
e
r
a
s
s
e
t
s
4,513,389 3,490,038
L
I
A
B
I
L
I
T
I
E
S
A
N
D
S
H
A
R
E
H
O
L
D
E
R
S
'
E
Q
U
I
T
Y
L
I
A
B
I
L
I
T
I
E
S
:
C 2,710,648 949,139
o
l
l
a
t
e
r
a
l
i
z
e
d
m
o
r
t
g
a
g
e
o
b
l
i
g
a
t
i
o
n
s
R 1,226,401 1,983,358
e
p
u
r
c
h
a
s
e
a
g
r
e
e
m
e
n
t
s
N 94,969 154,041
o
t
e
s
p
a
y
a
b
l
e
A 3,807 5,278
c
c
r
u
e
d
i
n
t
e
r
e
s
t
p
a
y
a
b
l
e
O 29,721 43,399
t
h
e
r
l
i
a
b
i
l
i
t
i
e
s
4,065,546 3,135,215
S
H
A
R
E
H
O
L
D
E
R
S
'
E
Q
U
I
T
Y
:
P
r
e
f
e
r
r
e
d
s
t
o
c
k
,
p
a
r
v
a
l
u
e
$
.
0
1
p
e
r
s
h
a
r
e
,
5
0
,
0
0
0
,
0
0
0
s
h
a
r
e
s
a
u
t
h
o
r
i
z
e
d
:
9.75% Cumulative Convertible
Series A
1,552,500 issued and 35,460 35,460
outstanding
($37,260 aggregate
liquidation preference)
9.55% Cumulative Convertible
Series B
2,196,824 issued and 51,425 51,425
outstanding
($53,822 aggregate
liquidation preference)
C
o
m
m
o
n
s
t
o
c
k
,
p
a
r
v
a
l
u
e
$
.
0
1
p
e
r
s
h
a
r
e
,
5
0
,
0
0
0
,
0
0
0
s
h
a
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e
s
a
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t
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o
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i
z
e
d
,
2
0
,
5
5
3
,
9
4
3
a
n
d
2
0
,
1
9
8
,
6
5
4
i
s
s
u
e
d
a 206 202
n
d
o
u
t
s
t
a
n
d
i
n
g
,
r
e
s
p
e
c
t
i
v
e
l
y
A 289,085 281,508
d
d
i
t
i
o
n
a
l
p
a
i
d-
i
n
c
a
p
i
t
a
l
N 65,596 (4,759)
e
t
u
n
r
e
a
l
i
z
e
d
g
a
i
n
(
l
o
s
s
)
o
n
m
o
r
t
g
a
g
e
i
n
v
e
s
t
m
e
n
t
s
R 6,071 (9,013)
e
t
a
i
n
e
d
e
a
r
n
i
n
g
s
(
d
e
f
i
c
i
t
)
447,843 354,823
4,513,389 3,490,038
</TABLE>
<TABLE>
<CAPTION>
RESOURCE MORTGAGE CAPITAL, INC.
Consolidated Balance Sheets
(Thousands except share data)
Q N
u i
a n
r e
t M
e o
r n
E t
n h
d s
e E
d n
S d
e e
p d
t S
e e
m p
b t
e e
r m
3 b
0 e
, r
3
0
,
1996 1995 1996 1995
I
n
t
e
r
e
s
t
i
n
c
o
m
e
:
<S> <C> <C> <C> <C>
C $ $ $ $
o 40,237 18,234 95,880 40,940
l
l
a
t
e
r
a
l
f
o
r
C
M
O
s
M
o 33,388 42,110 105,344 122,695
r
t
g
a
g
e
s
e
c
u
r
i
t
i
e
s
M
o 4,025 6,406 26,505 24,941
r
t
g
a
g
e
l
o
a
n
s
i
n
w
a
r
e
h
o
u
s
e
N
o 763 - 1,175 -
t
e
r
e
c
e
i
v
a
b
l
e
78,413 66,750 228,904 188,576
I
n
t
e
r
e
s
t
a
n
d
r
e
l
a
t
e
d
e
x
p
e
n
s
e
:
C
o 14,557
l 31,191 75,270 34,747
l
a
t
e
r
a
l
i
z
e
d
m
o
r
t
g
a
g
e
o
b
l
i
g
a
t
i
o
n
s
R
e 25,190 35,130 88,150 111,441
p
u
r
c
h
a
s
e
a
g
r
e
e
m
e
n
t
s
N
o 1,743 3,192 6,588 9,045
t
e
s
p
a
y
a
b
l
e
O
t 387 791 2,083 3,182
h
e
r
P
r 900 1,174 1,700 1,636
o
v
i
s
i
o
n
f
o
r
l
o
s
s
e
s
59,411 54,844 173,791 160,051
N
e 19,002 11,906 55,113 28,525
t
i
n
t
e
r
e
s
t
m
a
r
g
i
n
G
a 1,912 2,307 14,615 7,157
i
n
o
n
s
a
l
e
o
f
a
s
s
e
t
s
O
t 89 316 1,112 2,235
h
e
r
i
n
c
o
m
e
G
e (4,445) (4,401) (15,700) (13,152)
n
e
r
a
l
a
n
d
a
d
m
i
n
i
s
t
r
a
t
i
v
e
e
x
p
e
n
s
e
s
N
e $ $ $ $
t 16,558 10,128 55,140 24,765
i
n
c
o
m
e
N
e 16,558 10,128 55,140 24,765
t
i
n
c
o
m
e
D
i (2,195) (908) (6,581) (908)
v
i
d
e
n
d
s
o
n
p
r
e
f
e
r
r
e
d
s
t
o
c
k
N
e $ $ $ $
t 14,363 9,220 48,559 23,857
i
n
c
o
m
e
a
v
a
i
l
a
b
l
e
t
o
c
o
m
m
o
n
s
h
a
r
e
h
o
l
d
e
r
s
P
e
r
c
o
m
m
o
n
s
h
a
r
e
:
Primary $ $ $ $
0.70 0.46 2.38 1.19
Fully diluted $ $ $ $
0.68 0.46 2.28 1.19
W
e
i
g
h
t
e
d
a
v
e
r
a
g
e
n
u
m
b
e
r
o
f
c
o
m
m
o
n
s
h
a
r
e
s
o
u
t
s
t
a
n
d
i
n
g
Primary
20,510,77 20,129,0 20,385,59 20,104,26
7 11 2 5
Fully diluted
24,260,10 21,686,8 24,134,91 20,619,04
1 70 6 5
</TABLE>
