As filed with the Securities and Exchange Commission on January 28, 1994
Registration No. 33-50705
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RESOURCE MORTGAGE CAPITAL, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 52-1549373
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10500 Little Patuxent Parkway
Columbia, Maryland 21044
(410) 715-2000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Thomas H. Potts
President
Resource Mortgage Capital, Inc.
10500 Little Patuxent Parkway
Columbia, Maryland 21044
(410) 715-2000
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Elizabeth R. Hughes, Esq.
Venable, Baetjer and Howard
1800 Mercantile Bank & Trust Bldg.
2 Hopkins Plaza
Baltimore, Maryland 21201
(410) 244-7400
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following Box: -----
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: //x//
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The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission acting pursuant to said Section 8(a), may determine.
Subject to Completion, dated January 28, 1994
PROSPECTUS
Resource Mortgage Capital, Inc.
Common Stock, Preferred Stock, Debt Securities
Warrants to Purchase Common Stock, Warrants
to Purchase Preferred Stock and Warrants to
Purchase Debt Securities
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Resource Mortgage Capital, a Virginia corporation (the "Company"),
directly or through agents, dealers or underwriters designated from
time to time, may issue and sell from time to time one or more of the
following types of its securities (the "Securities"): (i) shares of
its common stock, par value $0.01 per share ("Common Stock"); (ii)
shares of its preferred stock, no par value, in one or more series
("Preferred Stock"), (iii) debt securities, in one or more series, any
series of which may be either senior debt securities or subordinated
debt securities (collectively, "Debt Securities" and, as appropriate,
"Senior Debt Securities" or "Subordinated Debt Securities"), (iv)
warrants to purchase shares of Common Stock ("Common Stock Warrants");
(v) warrants to purchase Preferred Stock ("Preferred Stock Warrants");
(vi) warrants to purchase debt securities ("Debt Warrants) and (vii)
any combination of the foregoing, either individually or as units
consisting of one or more of the foregoing types of Securities. The
Securities offered pursuant to this Prospectus may be issued in one or
more series, in amounts, at prices and on terms to be determined at
the time of the offering of each such series. The Securities offered
by the Company pursuant to this Prospectus will be limited to
$200,000,000 aggregate initial public offering price, including the
exercise price of any Common Stock Warrants, Preferred Stock Warrants
and Debt Warrants (collectively, "Securities Warrants").
The specific terms of each offering of Securities in respect of
which this Prospectus is being delivered are set forth in an
accompanying Prospectus Supplement (each, a "Prospectus Supplement")
relating to such offering of Securities. Such specific terms include,
without limitation, to the extent applicable (1) in the case of any
series of Preferred Stock, the specific designations, rights,
preferences, privileges and restrictions of such series of Preferred
Stock, including the dividend rate or rates or the method for
calculating same, dividend payment dates, voting rights, liquidation
preferences, and any conversion, exchange, redemption or sinking fund
provisions; (2) in the case of any series of Debt Securities, the
specific designations, rights and restrictions of such series of Debt
Securities, including without limitation whether the Debt Securities
are Senior Debt Securities or Subordinated Debt Securities, the
currency in which such Debt Securities are denominated and payable,
the aggregate principal amount, stated maturity, method of calculating
and dates for payment of interest and premium, if any, and any
conversion, exchange, redemption or sinking fund provisions; (3) in
the case of the Securities Warrants, the Debt Securities, Preferred
Stock or Common Stock, as applicable, for which each such warrant is
exercisable, and the exercise price, duration, detachability and call
provisions of each such warrant; and (4) in the case of any offering
of Securities, to the extent applicable, the initial public offering
price or prices, listing on any securities exchange, certain federal
income tax consequences and the agents, dealers or underwriters, if
any, participating in the offering and sale of the Securities. If so
specified in the applicable Prospectus Supplement, any series of
Securities may be issued in whole or in part in the form of one or
more temporary or permanent Global Securities, as defined herein.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
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The Company may sell all or a portion of any offering of its
Securities through agents, to or through underwriters or dealers, or
directly to other purchasers. See "Plan Distribution." The related
Prospectus Supplement for each offering of Securities sets forth the
name of any agents, underwriters or dealers involved in the sale of
such Securities and any applicable fee, commission, discount or
indemnification arrangement with any such party. See "Use of
Proceeds."
This Prospectus may not be used to consummate sales of Securities
unless accompanied by a Prospectus Supplement. The delivery in any
jurisdiction of this Prospectus together with a Prospectus Supplement
relating to specific Securities shall not constitute an offer in such
jurisdiction of any other Securities covered by this Prospectus but
not described in such Prospectus Supplement.
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The date of this Prospectus is , 199--
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR THE
ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, AGENT OR DEALER. NEITHER
THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS
SUPPLEMENT NOR ANY DISTRIBUTION OF SECURITIES BEING OFFERED PURSUANT TO
THIS PROSPECTUS AND AN ACCOMPANYING PROSPECTUS SUPPLEMENT SHALL UNDER
ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE
INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AT ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THEREOF. THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO PURCHASE SECURITIES BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's
following regional offices: Chicago Regional Office, Room 3190, 230
South Dearborn Street, Chicago, Illinois 60604; and New York Regional
Office, Room 1400, 75 Park Place, New York, New York 10007. Copies of
such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549. The Common Stock of the Company is
listed on the New York Stock Exchange ("NYSE") and such reports, proxy
statements and other information concerning the Company may also be
inspected at the offices of such Exchange at 20 Broad Street, New York,
New York 10005.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Securities offered hereby. This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the
rules and regulations of the Commission. For further information with
respect to the Company and the Securities offered hereby, reference is
made to the Registration Statement and the exhibits and schedules
thereto. Statements contained in this Prospectus as to the contents of
any contract or other documents are not necessarily complete, and in
each instance, reference is made to the copy of such contract or
documents filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the
Company are incorporated in this Prospectus by reference: Annual Report
on Form 10-K for the year ended December 31, 1992, amended as reflected
in the Form 10-K/A for the year ended December 31, 1992; Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993, amended as
reflected in the Form 10-Q/A for the quarter ended March 31, 1993;
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993;
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993
and the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A under the Exchange Act,
including any amendment or report filed to update the description.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of all Securities shall be
deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained
herein or in any accompanying Prospectus Supplement relating to a
specific offering of Securities or in any other subsequently filed
document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified
or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus or any accompanying Prospectus
Supplement. Subject to the foregoing, all information appearing in this
Prospectus is qualified in its entirety by the information appearing in
the documents incorporated herein by reference.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such
person, a copy of any and all of the documents described above under
"Incorporation of Certain Documents by Reference", other than exhibits
to such documents, unless such exhibits are specifically incorporated by
reference therein. Written requests should be directed to: Resource
Mortgage Capital, Inc., 10500 Little Patuxent Parkway, Suite 650,
Columbia, Maryland 21044, Attention: Investor Relations, Telephone:
(410) 715-2000.
THE COMPANY
Resource Mortgage Capital, Inc. (the "Company"), incorporated in
Virginia in 1987, operates a mortgage conduit and invests in a portfolio
of residential mortgage securities. The Company's primary strategy is
to use its mortgage conduit operations, which involve the purchase and
securitization of residential mortgage loans, to create investments for
its portfolio. The Company has recently broadened its conduit programs
and loan products within the residential mortgage market in order to
diversify its sources of income and investments. The Company's
principal sources of income are net interest income on its investment
portfolio, gains on the securitization and sale of mortgage loans and
the interest spread realized while the mortgage loans are being
accumulated for securitization.
Mortgage Conduit Operations
As a "mortgage conduit," the Company acts as an intermediary between
the originators of mortgage loans and the permanent investors in the
mortgage loans or the mortgage-related securities backed by such
mortgage loans. The Company purchases and securitizes mortgage loans
that are secured by first liens on single-family residential properties
through its primary conduit activity, the Mortgage Purchase Program
("MPP").
The mortgage loans acquired through the MPP are originated by various
sellers that meet the Company's qualification criteria. These sellers
include savings and loan associations, commercial banks, mortgage banks
and other financial intermediaries. The Company acquires mortgage loans
secured by residential properties throughout the continental United
States. The mortgage loans acquired are generally "nonconforming" first
mortgage loans. Nonconforming mortgage loans are loans which will not
qualify for purchase by the Federal Home Loan Mortgage Corporation
("FHLMC") or Federal National Mortgage Association ("FNMA") or for the
inclusion in a loan guarantee program sponsored by the Government
National Mortgage Association ("GNMA") since they generally have
outstanding principal balances in excess of the guidelines of these
agencies (currently $203,150 for FNMA and FHLMC) or are originated based
upon different underwriting or qualification criteria than are required
by the agencies' programs. The Company focuses on the purchase of
nonconforming loans because such loans are not eligible for
securitization under the agencies' programs; however, such nonconforming
loans may have higher risks than conforming mortgage loans due to their
lower liquidity, different underwriting or qualification criteria, and
higher loan balances. The MPP is a significant source of the Company's
income and creates investments with favorable yields for its investment
portfolio.
When a sufficient volume of mortgage loans is accumulated, the loans
are securitized through the issuance of mortgage-backed securities. The
accumulation period is approximately 60 days and during this period, the
Company is at risk for credit losses on the mortgage loans acquired. In
addition, the Company is exposed to risks of interest rate fluctuations
during the accumulation period and may enter into hedging transactions
to protect against these risks. To date, the mortgage-backed securities
have been structured so as to be rated in one of the two highest rating
categories (i.e. AA or AAA) by at least one of the nationally recognized
rating agencies. In contrast to government issued mortgage-backed
securities in which the principal and interest payments are guaranteed,
securities backed by MPP loans do not have such a guarantee and derive
their rating through adequate levels of credit enhancement. This credit
enhancement can be achieved through the use of mortgage pool insurance
or a senior/subordinated securitization structure.
Historically, the Company has used mortgage pool insurance for credit
enhancement and reserve funds to cover certain risks excluded under such
insurance. With this structure, mortgage loans purchased through the
MPP have a commitment for mortgage pool insurance from a mortgage
insurance company with a claims paying ability in one of the two highest
rating categories. The Company relies upon the credit review and
analysis of each mortgage loan, which is performed by the mortgage
insurer, in deciding to purchase a mortgage loan. Credit losses covered
by the pool insurance policies are borne by the pool insurers to the
limits of their policies and by the security holders if losses exceed
those limits.
To the extent that the Company purchases mortgage loans without a
commitment for mortgage pool insurance, the Company will rely upon its
own underwriting for credit review and analysis in deciding to purchase
these loans and will generally retain a portion of the subordinated
classes of securities that are issued. Thus, the Company has
established an underwriting department and a risk management department.
The underwriting department, with a current staff of approximately 25
personnel, is managed by an individual with cumulative single-family
underwriting experience in excess of 20 years. The risk management
department, which will supervise the resolution of defaulted mortgage
loans not covered by mortgage pool insurance, currently has a staff of
six personnel. While the individuals in each such department have
experience in their respective fields, the Company has not had any
experience underwriting single-family mortgage loans prior to April
1993. To the extent losses are greater than expected, the holders of
the subordinated securities, which may include the Company, will
experience a lower yield (which may be negative) than expected on their
investments.
Given recent developments in the mortgage market, the Company plans to
securitize all or a portion of the single-family loans purchased through
the MPP by the issuance of mortgage securities in a senior/subordinated
structure. Such market developments include the preference of investors
for mortgage-backed securities using the senior/subordinated structure,
the increase in the cost of mortgage pool insurance, and recent
underwriting limitations initiated by the mortgage insurers. With the
senior/subordinated structure, the credit risk is concentrated in the
subordinated classes of the securities, thus allowing the senior classes
of the securities to receive the higher credit ratings. The Company
will establish loss reserves relative to the credit risk retained; the
establishment of such loss reserves will have the effect of reducing
both current results and dividend distributions. The securitization
structure will depend primarily on which form of credit enhancement
(e.g. pool insurance or subordination) has the lower effective cost.
The Company anticipates that subordination will generally have the lower
cost but will require a greater capital investment by the Company
relative to the amount of mortgage loans securitized. The Company
expects that, as a result of purchasing mortgage loans without a
commitment for mortgage pool insurance as well as mortgage loans that
have a commitment for mortgage pool insurance, its MPP volume will be
higher than it would have been if the Company continued to purchase only
mortgage loans that have a commitment for mortgage pool insurance.
By directly underwriting the mortgage loans, the Company expects its
risk related to borrower or lender fraud will be reduced, but that the
Company will have greater risk relating to the cost of selling the
credit risk in the market through the sale of the subordinated classes.
When the Company uses mortgage pool insurance, the cost of such coverage
is generally known in advance of the purchase of a mortgage loan. With
the senior/subordinated structure, the cost of selling the credit risk
into the market will not be known until the sale of the subordinated
securities. Additionally, certain mortgage loans underwritten by the
Company's personnel may have greater credit risk than those mortgage
loans that would qualify under the mortgage pool insurers' current
guidelines. The Company may retain a subordinated class from each
securitization that ranges from .5% to 2% of the principal balance of
the loans that are securitized, which will represent the first-loss
class.
In addition to the MPP, the Company has recently expanded its conduit
activities to take advantage of other market opportunities and further
diversify the Company's sources of income and investments. These
activities include the origination and securitization of multi-family
mortgage loans and the purchase and securitization of certain single-
family mortgage loans which would not qualify under the tighter
underwriting guidelines used for the MPP. Upon securitization of these
mortgage loans, the Company will retain a portion of the securities
created and any securities retained would be subject to credit
risk on the mortgage loans. The Company believes that it will originate
or purchase these mortgage loans at a sufficient yield to compensate for
retaining a portion of the risk.
Portfolio of Mortgage Investments
The Company's investment strategy is to create a diversified portfolio
of mortgage securities that in the aggregate generates stable income for
the Company in a variety of interest rate environments and preserves the
capital base of the Company. The Company generally creates investments
for its portfolio by retaining a portion of the mortgage securities that
are generated from its mortgage conduit activities. The Company
continuously monitors the aggregate projected yield of its investment
portfolio under various interest rate environments and while certain
investments may perform poorly in an increasing interest rate
environment, certain investments may perform well, and others may not
be impacted at all. By creating a portfolio of internally generated
investments, the Company believes it can structure the portfolio to have
more favorable yields in a variety of interest rate environments than if
it purchased mortgage investments in the market.
Other Information
In August 1992, the shareholders approved the change in the Company's
name from "RAC Mortgage Investment Corporation" to "Resource Mortgage
Capital, Inc." This name change was related to the Company's
termination of its prior management agreements with Ryland Acceptance
Corporation and affiliates effective June 16, 1992. Subsequent to such
date, the Company has been operated on a self-managed basis by its own
employees.
The Company, and its qualified real estate investment trust ("REIT")
subsidiaries, have elected to be treated as a REIT for federal income
tax purposes. A REIT must distribute annually substantially all of its
income to shareholders. The Company and its qualified REIT subsidiaries
(collectively, "Resource REIT") generally will not be subject to federal
income tax to the extent that certain REIT qualifications are met.
Certain other affiliated entities which are consolidated with the
Company for financial reporting purposes, are not consolidated for
federal income tax purposes because such entities are not qualified REIT
subsidiaries. All taxable income of these affiliated entities are
subject to federal and state income taxes, where applicable. See
"Federal Income Tax Considerations.''
The principal executive office of the Company is located at 10500
Little Patuxent Parkway, Suite 650, Columbia, Maryland 21044, telephone
number (410) 715-2000.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement for
any offering of Securities, the net proceeds from the sale of Securities
offered by the Company will be available for the general corporate
purposes of the Company. These general corporate purposes may include,
without limitation, repayment of maturing obligations, redemption of
outstanding indebtedness, financing future acquisitions (including
acquisitions of mortgage loans and other mortgage-related products),
capital expenditures and working capital. Pending any such uses, the
Company may invest the net proceeds from the sale of any Securities or
may use them to reduce short-term indebtedness. If the Company intends
to use the net proceeds from a sale of Securities to finance a
significant acquisition, the related Prospectus Supplements will
describe the material terms of such acquisition.
If Debt Securities are issued to one or more persons in exchange for
the Company's outstanding debt securities, the accompanying Prospectus
Supplement related to such offering of Debt Securities will set forth
the aggregate principal amount of the outstanding debt securities which
the Company will receive in such exchange and which will cease to be
outstanding, the residual cash payment, if any, which the Company may
receive from such persons or which such persons may receive from the
Company, as appropriate, the dates from which the Company will pay
interest accrued on the outstanding debt securities to be exchanged for
the offered Debt Securities and an estimate of the Company's expenses in
respect of such offering of the Debt Securities.
RATIO OF AVAILABLE EARNINGS TO FIXED CHARGES
The Company's ratio of available earnings to fixed charges was 1:1 or
greater in each of the last five fiscal years and the nine months ended
September 30, 1993. The ratios were as follows:
Nine months
ended
September 30, Year ended December 31,
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1993 1992 1991 1990 1989 1988
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Ratio of
earnings
to fixed
charges (1) 1.68:1 1.68:1 1.58:1 1.63:1 1.00:1 2.67:1
(1) For purposes of computing the ratios, "available earnings" consist
of net earnings plus interest and debt expense and excludes fixed
charges related to CMOs issued by the Company which are nonrecourse to
the Company. This sum is divided by the total interest and debt expense
to determine the ratio of available earnings to fixed charges.
These ratios represent a measure of the ability to meet debt service
obligations from funds generated from operations.
DESCRIPTION OF SECURITIES
The following is a brief description of the material terms of the
Company's capital stock. This description does not purport to be
complete and is subject in all respects to applicable Virginia law and
to the provisions of the Company's Articles of Incorporation and Bylaws,
copies of which are on file with the Commission as described under
"Available Information" and are incorporated by reference herein.
General
The Company may offer under this Prospectus one or more of the
following categories of its Securities: (i) shares of its Common Stock,
par value $0.01 per share; (ii) shares of its Preferred Stock, no par
value, in one or more series; (iii) Debt Securities, in one or more
series, any series of which may be either Senior Debt Securities or
Subordinated Debt Securities; (iv) Common Stock Warrants; (v) Preferred
Stock Warrants; (vi) Debt Warrants; and (vii) any combination of the
foregoing, either individually or as units consisting of one or more of
the types of Securities described in clauses (i) through (vi). The
terms of any specific offering of Securities, including the terms
of any units offered, will be set forth in a Prospectus Supplement
relating to such offering.
The Company's authorized equity capitalization consists of 50 million
shares of Common Stock, par value $0.01 per share and 50 million shares
of preferred stock, no par amount. Neither the holders of the Common
Stock nor of any preferred stock, now or hereafter authorized, will be
entitled to any preemptive or other subscription rights. The Common
Stock is listed on the New York Stock Exchange. The Company intends to
list any additional shares of its Common Stock which are issued and sold
hereunder. The Company may list any series of its Preferred Stock which
are offered and sold hereunder, as described in the Prospectus
Supplement relating to such series of Preferred Stock.
Common Stock
As of November 30, 1993, there were 19,081,412 outstanding shares of
Common Stock held by 3,847 holders of record. Holders of Common Stock
are entitled to receive dividends when, as and if declared by the Board
of Directors, out of funds legally available therefor. Dividends on any
outstanding shares of preferred stock must be paid in full before
payment of any dividends on the Common Stock. Upon liquidation,
dissolution or winding up of the Company, holders of Common Stock are
entitled to share ratably in assets available for distribution after
payment of all debts and other liabilities and subject to the prior
rights of any holders of any preferred stock then outstanding.
Holders of Common Stock are entitled to one vote per share with
respect to all matters submitted to a vote of shareholders and do not
have cumulative voting rights. Accordingly, holders of a majority of
the Common Stock entitled to vote in any election of directors may elect
all of the directors standing for election, subject to the voting rights
(if any) of any series of preferred stock that may be outstanding from
time to time. The Company's Articles of Incorporation and Bylaws
contain no restrictions on the repurchase by the Company of shares of
the Common Stock. All the outstanding shares of Common Stock are
validly issued, fully paid and nonassessable.
Preferred Stock
The Board of Directors is authorized to designate with respect to each
series of preferred stock the number of shares in each such series, the
dividend rates and dates of payment, voluntary and involuntary
liquidation preferences, redemption prices, whether or not dividends
shall be cumulative and, if cumulative, the date or dates from which the
same shall be cumulative, the sinking fund provisions, if any, for
redemption or purchase of shares, the rights, if any, and the terms and
conditions on which shares can be converted into or exchanged for shares
of another class or series, and the voting rights, if any. As of the
date hereof, there were no shares of preferred stock issued and
outstanding.
Any preferred shares issued will rank prior to the Common Stock as to
dividends and as to distributions in the event of liquidation,
dissolution or winding up of the Company. The ability of the Board of
Directors to issue preferred stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes,
could, among other things, adversely affect the voting powers of holders
of Common Stock.
Securities Warrants
General
The Company may issue Securities Warrants for the Purchase of Common
Stock, Preferred Stock or Debt Securities. Such warrants are referred
to herein as Common Stock Warrants, Preferred Stock Warrants or Debt
Warrants, as appropriate. Securities Warrants may be issued
independently or together with any other Securities covered by the
Registration Statement and offered by this Prospectus and any
accompanying Prospectus Supplement and may be attached to or separate
from such other Securities. Each series of Securities Warrants will be
issued under a separate agreement (each, a "Securities Warrant
Agreement") to be entered into between the Company and a bank or trust
company, as agent (each, a "Securities Warrant Agent"), all as set forth
in the Prospectus Supplement relating to the particular issue of offered
Securities Warrants. Each issue of Securities Warrants will be
evidenced by warrant certificates (the "Securities Warrant
Certificates"). The Securities Warrant Agent will act solely as an
agent of the Company in connection with the Securities Warrant
Certificates and will not assume any obligation or relationship of
agency or trust for or with any holders of Securities Warrant
Certificates or beneficial owners of Securities Warrants. Copies of the
definitive Securities Warrant Agreements and Securities Warrant
Certificates will be filed with the Commission by means of a Current
Report on Form 8-K in connection with the offering of such series of
Securities Warrants.
If Securities Warrants are offered, the applicable Prospectus
Supplement will describe the terms of such Securities Warrants,
including in the case of Securities Warrants for the purchase of Debt
Securities, the following where applicable: (i) the offering price; (ii)
the currencies in which such Debt Warrants are being offered; (iii) the
designation, aggregate principal amount, currencies, denominations and
terms of the series of Debt Securities purchasable upon exercise of such
Debt Warrants; (iv) the designation and terms of any Securities with
which such Debt Warrants are being offered and the number of such Debt
Warrants being offered with each such Security; (v) the date on and
after which such Debt Warrants and the related Securities will be
transferable separately; (vi) the principal amount of the series of Debt
Securities purchasable upon exercise of each such Debt Warrant and the
price at which the currencies in which such principal amount of Debt
Securities of such series may be purchased upon such exercise; (vii) the
date on which the right to exercise such Debt Warrants shall commence
and the date on which such right shall expire (the "Expiration Date");
(viii) whether the Debt Warrant will be issued in registered or bearer
form; (ix) certain federal income tax consequences; and (x) any other
material terms of such Debt Warrants.
In the case of Securities Warrants for the purchase of Preferred Stock
or Common Stock, the applicable Prospectus Supplement will describe the
terms of such Securities Warrants, including the following where
applicable: (i) the offering price; (ii) the aggregate number of shares
purchasable upon exercise of such Securities Warrants, and in the case
of Securities Warrants for Preferred Stock, the designation, aggregate
number and terms of the series of Preferred Stock purchasable upon
exercise of such Securities Warrants; (iii) the designation and terms of
the Securities with which such Securities Warrants are being offered and
the number of such Securities Warrants being offered with each such
Security; (iv) the date on and after which such Securities Warrants and
the related Securities will be transferable separately; (v) the number
of shares of Preferred Stock or shares of Common Stock purchasable upon
exercise of each such Securities Warrant and the price at which such
number of shares of Preferred Stock of such series or shares of Common
Stock may be purchased upon such exercise; (vi) the date on which the
right to exercise such Securities Warrants shall commence and the
Expiration Date on which such right shall expire; (vii) certain federal
income tax consequences; and (viii) any other material terms of such
Securities Warrants.
Securities Warrant Certificates may be exchanged for new Securities
Warrant Certificates of different denominations, may (if in registered
form) be presented for registration of transfer, and may be exercised at
the corporate trust office of the appropriate Securities Warrant Agent
or other office indicated in the applicable Prospectus Supplement.
Prior to the exercise of any Securities Warrant to purchase Debt
Securities, holders of such Debt Warrants will not have any of the
rights of Holders of the Debt Securities purchasable upon such exercise,
including the right to receive payments of principal, premium, if any,
or interest, if any, on the Debt Securities purchasable upon such
exercise or to enforce covenants in the applicable Indenture. Prior to
the exercise of any Securities Warrants to purchase Preferred Stock or
Common Stock, holders of such Preferred Stock Warrants or Common Stock
Warrants will not have any rights of holders of the respective Preferred
Stock or Common Stock purchasable upon such exercise, including the
right to receive payments of dividends, if any, on the Preferred Stock
or Common Stock purchasable upon such exercise or to exercise any
applicable right to vote.
Exercise of Securities Warrants
Each Securities Warrant will entitle the holder thereof to purchase
such principal amount of Debt Securities or number of shares of
Preferred Stock or shares of Common Stock, as the case may be, at such
exercise price as shall in each case be set forth in, or calculable
from, the Prospectus Supplement relating to the offered Securities
Warrants. After the close of business on the Expiration Date (or such
later date to which such Expiration Date may be extended by the
Company), unexercised Securities Warrants will become void.
Securities Warrants may be exercised by delivering to the Securities
Warrant Agent payment, as provided in the applicable Prospectus
Supplement, of the amount required to purchase the applicable Debt
Securities, Preferred Stock or Common Stock purchasable upon such
exercise together with certain information set forth on the reverse side
of the Securities Warrant Certificate. Upon receipt of such payment and
the definitive Securities Warrant Certificates properly completed and
duly executed at the corporate trust office of the Securities Warrant
Agent or any other office indicated in the applicable Prospectus
Supplement, the Company will, as soon as practicable, issue and deliver
the applicable Debt Securities, Preferred Stock or Common Stock
purchasable upon such exercise. If fewer than all of the Securities
Warrants represented by such Securities Warrant Certificate are
exercised, a new Securities Warrant Certificate will be issued for the
remaining amount of Securities Warrants.
Amendments and Supplements to Securities Warrant Agreements
Each Securities Warrant Agreement may be amended or supplemented
without the consent of the holders of the Securities Warrants issued
thereunder to effect changes that are not inconsistent with the
provisions of the Securities Warrants and that do not adversely affect
the interests of the holders of the Securities Warrants.
Common Stock Warrant Adjustments
Unless otherwise indicated in the applicable Prospectus Supplement,
the exercise price of, and the number of shares of Common Stock covered
by, a Common Stock Warrant are subject to adjustment in certain events,
including: (i) the issuance of Common Stock as a dividend or
distribution on the Common Stock; (ii) subdivisions and combinations of
the Common Stock; (iii) the issuance to all holders of Common Stock of
certain rights or warrants entitling them to subscribe for or purchase
Common Stock within the number of days, specified in the applicable
Prospectus Supplement, after the date fixed for the determination of the
stockholders entitled to receive such rights or warrants, at less than
the current market price (as defined in the Securities Warrant Agreement
governing such series of Common Stock Warrants); and (iv) the
distribution to all holders of Common Stock of evidences of indebtedness
or assets of the Company (excluding certain cash dividends and
distributions described below). The terms of any such adjustment will
be specified in the related Prospectus Supplement for such Common Stock
Warrants.
No Rights as Stockholders
Holders of Common Stock Warrants will not be entitled by virtue of
being such holders, to vote, to consent, to receive dividends, to
receive notice as stockholders with respect to any meeting of
stockholders for the election of directors of the Company of any other
matter, or to exercise any rights whatsoever as stockholders of the
Company.
Existing Securities Holders
The Company may issue, as a dividend at no cost, such Securities
Warrants to holders of record of the Company's Securities or any class
thereof on the applicable record date. If Securities Warrants are so
issued to existing holders of Securities, the applicable Prospectus
Supplement will describe, in addition to the terms of the Securities
Warrants and the Securities issuable upon exercise thereof, the
provisions, if any, for a holder of such Securities Warrants who validly
exercises all Securities Warrants issued to such holder to subscribe for
unsubscribed Securities (issuable pursuant to unexercised Securities
Warrants issued to other holders) to the extent such Securities Warrants
have not been exercised.
Debt Securities
General
The Company may offer one or more series of its Debt Securities
representing general, unsecured obligations of the Company. Any series
of Debt Securities may either (1) rank prior to all subordinated
indebtedness of the Company and pari passu with all other unsecured
indebtedness of the Company outstanding on the date of the issuance of
such Debt Securities ("Senior Debt Securities") or (2) be subordinated
in light of payments to certain other obligations of the Company
outstanding on the date of issuance ("Subordinated Debt Securities").
In this Prospectus, any indenture relating to Subordinated Debt
Securities is referred to as a "Subordinated Indenture" and the term
"Indenture" refers to Senior and Subordinated Indentures, collectively.
The aggregate principal amount of Debt Securities which may be issued
by the Company will be set from time to time by the Board of Directors.
Further, the amount of Debt Securities which may be offered by this
Prospectus will be subject to the aggregate initial offering price of
Securities specified in the Registration Statement. Each Indenture will
permit the issuance of an unlimited amount of Debt Securities thereunder
from time to time in one or more series. Additional debt securities may
be issued pursuant to another registration statement for issuance under
any Indenture. Any offering of Debt Securities may be denominated in
any currency composite designated by the Company.
The following description of the Debt Securities which may be offered
by the Company hereunder describes certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate.
The particular terms and provisions of the Debt Securities and the
extent to which the following general provisions may apply to such
offering of Debt Securities will be described in the accompanying
Prospectus Supplement relating to such offering of Debt Securities. The
following descriptions of certain provisions of the Indentures do not
purport to be complete and are qualified in their entirety by reference
to the form of Senior Indenture or Subordinated Indenture, as
appropriate. The definitive Indenture relating to each offering of Debt
Securities will be filed with the Commission by means of a Current
Report on Form 8-K in connection with the offering of such Debt
Securities. All article and section references appearing herein are
references to the articles and sections of the appropriate Indenture
and, unless defined herein, all capitalized terms have the respective
meanings specified in the appropriate Indenture.
The Prospectus Supplement relating to any offering of Debt Securities
will set forth the following terms and other information to the extent
applicable with respect to the Debt Securities being offered thereby;
(1) the designation, aggregate principal amount, authorized
denominations and priority of such Debt Securities; (2) the price
(expressed as a percentage of the aggregate principal amount of such
Debt Securities) at which such Debt Securities will be issued; (3) the
currency or currency units for which the Debt Securities may be
purchased and in which the principal of , and any interest on such
Debt Securities may be payable; (4) the stated maturity of such Debt
Securities or means by which a maturity date may be determined; (5) the
rate at which such Debt Securities will bear interest or the method by
which such rate of interest is to be calculated (which rate may be zero
in the case of certain Debt Securities issued at a price representing a
discount from the principal amount payable at maturity); (6) the periods
during which such interest will accrue, the dates on which such interest
will be payable (or the method by which such dates may be determined;
including without limitation that such rate of interest may bear an
inverse relationship to some index or standard) and the circumstances
under which the Company may defer payment of interest; (7) redemption
provisions, including any optional redemption, required repayment or
mandatory sinking fund provisions; (8) any terms by which such Debt
Securities may be convertible into shares of the Company's Common Stock,
Preferred Stock or any other Securities of the Company, including a
description of the Securities into which any such Debt Securities are
convertible; (9) any terms by which the principal of such Debt
Securities will be exchangeable for any other Securities of the Company;
(10) whether such Debt Securities are issuable as definitive Fully-
Registered Securities (as defined below) or Global Securities and, if
Global Securities are to be issued, the terms thereof, including the
manner in which interest thereon will be payable to the beneficial
owners thereof and other book-entry procedures, any terms for exchange
of such Global Securities into definitive Fully-Registered Securities
(as defined below) and any provisions relating to the issuance of a
temporary Global Security; (11) any additional restrictive covenants
included for the benefit of the holders of such Debt Securities; (12)
any additional events of default provided with respect to such Debt
Securities; (13) the terms of any Securities being offered together with
such Debt Securities, (14) whether such Debt Securities represent
general, unsecured obligations of the Company and (15) any other
material terms of such Debt Securities.
If any of the Debt Securities are sold for foreign currency units, the
restrictions, elections, tax consequences, specific terms, and other
information with respect to such issue of Debt Securities and such
currencies or currency units will be set forth in the Prospectus
Supplement relating to thereto.
Indenture Provisions
The Debt Securities may be issued in definitive, fully registered form
without coupons ("Fully Registered Securities"), or in a form registered
as to principal only with coupons or in bearer form with coupons.
Unless otherwise specified in the Prospectus Supplement, the Debt
Securities will only be Fully Registered Securities. In addition, Debt
Securities of a series may be issuable in the form of one or more Global
Securities, which will be denominated in an amount equal to all or a
portion of the aggregate principal amount of such Debt Securities. See
"Global Securities" below.
One or more series of Debt Securities may be sold at a substantial
discount below their stated principal amount, bearing no interest or
interest at a rate that at the time of issuance is below market rates.
Federal income tax consequences and special considerations applicable to
any such series will be described in the Prospectus Supplement relating
thereto.
Unless otherwise indicated in the related Prospectus Supplement for a
series of Debt Securities, there are no provisions contained in the
Indentures that would afford holders of Debt Securities protection in
the event of a highly leveraged transaction involving the Company.
Global Securities. Any series of Debt Securities may be issued in
whole or in part in the form of one or more Global Securities that will
be deposited with, or on behalf of, the Depositary identified in the
Prospectus Supplement relating to such series. Unless and until it is
exchanged in whole or in part for Debt Securities in individually
certificated form, a Global Security may not be transferred except as a
whole to a nominee of the Depositary for such Global Security, or by a
nominee for the Depositary to the Depositary, or to a successor of the
Depositary or a nominee of such successor.
The specific terms of the Depositary arrangement with respect to any
series of Debt Securities and the rights of, and limitations on, owners
of beneficial interests in a Global Security representing all or a
portion of a series of Debt Securities will be described in the
Prospectus Supplement relating to such series.
Modification of Indentures. Unless otherwise specified in the
related Prospectus Supplement, each Indenture, the rights and
obligations of the Company, and the rights of the Holders may be
modified with respect to one or more series of Debt Securities issued
under such Indenture with the consent of the Holders of not less than a
majority in principal amount of the outstanding Debt Securities of each
such series affected by the modification or amendment. No modification
of the terms of payment of principal or interest, and no modification
reducing the percentage required for modification, is effective against
any Holder without his consent.
Events of Default. Unless otherwise specified in the related
Prospectus Supplement, each Indenture, will provide that the following
are Events of Default with respect to any series of Debt Securities
issued thereunder: (1) default in the payment of the principal of any
Debt Security of such series when and as the same shall be due and
payable; (2) default in making a sinking fund payment, if any, when and
as the same shall be due and payable by the terms of the Debt Securities
of such series; (3) default for 30 days in payment of any installment of
interest on any Debt Securities of such series; (4) default for a
specified number of days after notice in the performance of any other
covenants in respect of the Debt Securities of such series contained in
the Indenture; (5) certain events of bankruptcy, insolvency or
reorganization, or court appointment of a receiver, liquidator, or
trustee of the Company or its property; and (6) any other Event of
Default provided in the applicable supplemental indenture under which
such series of Debt Securities is issued. An Event of Default with
respect to a particular series of Debt Securities issued under an
Indenture will not necessarily constitute an Event of Default with
respect to any other series of Debt Securities issued under such
Indenture. The trustee under an Indenture may withhold notice to the
Holders of any series of Debt Securities of any default with respect to
such series (except in the payment of principal or interest) if it
considers such withholding in the interests of such Holders.
If an Event of Default with respect to any series of Debt Securities
shall have occurred and be continuing, the appropriate trustee under the
Indenture or the Holders of not less than 25% in the aggregate principal
amount of the Debt Securities of such series may declare the principal,
or in the case of discounted Debt Securities, such portion thereof as
may be described in the Prospectus Supplement, of all the Debt
Securities of such series to be due and payable immediately.
Within four months after the close of each fiscal year, the Company
will file with each trustee under the indentures a certificate, signed
by specified officers, stating whether or not such officers have
knowledge of any default, and, if so, specifying each such default and
the nature thereof.
Subject to provisions relating to its duties in case of default, a
trustee under the Indentures shall be under no obligation to exercise
any of its rights or powers under the applicable Indenture at the
request, order, or direction of any Holder, unless such Holders shall
have offered to such trustee reasonable indemnity. Subject to such
provisions for indemnification, the Holders of a majority in principal
amount of the Debt Securities of any series may direct the time, method,
and place of conducting any proceeding for any remedy available to the
appropriate trustee, or exercising any trust or power conferred upon
such trustee, with respect to the Debt Securities of such series.
Payment and Transfer. Principal of, and premium and interest, if any,
on, fully Registered Securities will be payable at the Place of Payment
as specified in the applicable Prospectus Supplement, provided that
payment of interest, if any, may be made, unless otherwise provided in
the applicable Prospectus Supplement, by check mailed to the person in
whose names such Debt Securities are registered at the close of business
on the day or days specified in the Prospectus Supplement or transfer to
an account maintained by the payee located inside the United States.
The principal of, and premium and interest, if any, on, Debt Securities
in other forms will be payable in the manner and at the place or places
as designated by the Company and specified in the applicable Prospectus
Supplement. Unless otherwise provided in the Prospectus Supplement,
payment of interest may be made, in the case of a Bearer Security by the
transfer to an account maintained by the payee with a bank outside the
United States.
Fully Registered Securities may be transferred or exchanged at the
corporate trust office of the trustee or any other office or agency
maintained by the Company for such purposes, subject to the limitations
in the applicable Indenture, without the payment of any service charge
except for any tax or governmental charge incidental thereto.
Provisions with respect to the transfer and exchange of Debt Securities
in other forms will be set forth in the applicable Prospectus
Supplement.
Defeasance. The Indentures provide that each will cease to be
of further effect with respect to a certain series of Debt Securities
(except for certain obligations to register the transfer or exchange of
Securities) if (a) the Company delivers to the Trustee for the
Securities of such series for cancellation of all Securities of all
series and the coupons, if any, appertaining thereto, or (b) if the
Company deposits into trust with the Trustee money or United States
government obligations, that, through the payment of interest thereon
and principal thereof in accordance with their terms, will provide money
in an amount sufficient to pay all of the principal of, and interest on,
the Securities of such series on the dates such payments are due or
redeemable in accordance with the terms of such Securities.
Certain Charter and Virginia Law Provisions
Unless the amendment effects an extraordinary transaction, the
Articles of Incorporation of the Company may be amended with the
approval of the holders of a majority of the outstanding shares of
Common Stock, subject to the voting rights (if any) of any series of
preferred stock that may be outstanding from time to time. Amendments
that effect extraordinary transactions, which include mergers, share
exchanges, a sale of substantially all the assets of the Company, the
dissolution of the Company or the share ownership restrictions described
below, require the approval of the holders of more than two-thirds of
the outstanding shares of Common Stock (subject to any voting rights of
any series of preferred stock outstanding).
Special meetings of the shareholders of the Company may be called by a
majority of the Board of Directors, a majority of the unaffiliated
directors, the Chairman of the Board, the President or generally by
shareholders holding at least 25% of the outstanding shares of Common
Stock entitled to be voted at the meeting.
Virginia law and the Articles of Incorporation of the Company provide
that the directors and officers of the Company shall have no liability
to the Company or its shareholders in certain actions brought by or on
be half of shareholders of the Company unless such officer or director
has engaged in willful misconduct or violations of federal or state
securities laws and certain other activities.
Repurchase of Shares and Restrictions on Transfer
Two of the requirements for qualification for the tax benefits
accorded a REIT under the Internal Revenue Code of 1986, as amended
("the Code"), are that (i) during the last half of each taxable year not
more than 50% of the outstanding shares may be owned directly or
indirectly by five or fewer individuals and (ii) there must be at least
100 shareholders for at least 335 days in each taxable year. Those
requirements apply for all taxable years after the year in which a REIT
elects REIT status.
The Articles of Incorporation prohibit any person or group of persons
from acquiring or holding, directly or indirectly, ownership of a number
of shares of Common Stock in excess of 9.8% of the outstanding shares.
Shares of Common Stock owned by a person or group of persons in excess
of such amounts are referred to as "Excess Shares.'' For this purpose
the term "ownership'' is defined in accordance with the Code, the
constructive ownership provisions of Section 544 of the Code and Rule
13d-3 promulgated under the Exchange Act, and the term "group'' is
defined to have the same meaning as that term has for purposes of
Section 13(d)(3) of the Exchange Act. Accordingly, shares of Common
Stock owned or deemed to be owned by a person who individually owns less
than 9.8% of the shares outstanding may nevertheless be Excess Shares.
For purposes of determining whether a person holds Excess Shares, a
person or group will be treated as owning not only shares of Common
Stock actually or beneficially owned, but also any shares of Common
Stock attributed to such person or group under the constructive
ownership provisions contained in Section 544 of the Code.
The Articles of Incorporation provide that in the event any person
acquires Excess Shares, each Excess Share may be redeemed at any time by
the Company at the closing price of a share of Common Stock on the New
York Stock Exchange on the last business day prior to the redemption
date. From and after the date fixed for redemption of Excess
Shares, such shares shall cease to be entitled to any distribution and
other benefits, except only the right to payment of the redemption price
for such shares.
Under the Articles of Incorporation any acquisition of shares that
would result in failure to qualify as a REIT under the Code is void to
the fullest extent permitted by law, and the Board of Directors is
authorized to refuse to transfer shares to a person if, as a result of
the transfer, that person would own Excess Shares. Prior to any
transfer or transaction which, if consummated, would cause a shareholder
to own Excess Shares, and in any event upon demand by the Board of
Directors, a shareholder is required to file with the Company an
affidavit setting forth, as to that shareholder, the information
required to be reported in returns filed by shareholders under Treasury
Regulation Section 1.857-9 under the Code and in reports filed under
Section 13(d) of the Exchange Act. Additionally, each proposed
transferee of shares of Common Stock, upon demand of the Board of
Directors, also may be required to file a statement or affidavit with
the Company setting forth the number of shares already owned by the
transferee and any related person.
The Common Stock may not be purchased by nonresident aliens or foreign
entities. In addition, the Common Stock may not be held by
"disqualified organizations'' within the meaning of Section 860E(e)(5)
of the Code, which generally includes governmental entities and other
tax-exempt persons not subject to the tax on unrelated business taxable
income.
Transfer Agent and Registrar
The transfer agent and the registrar for the Company's Common Stock is
First Union National Bank of North Carolina, Charlotte, North Carolina.
PLAN OF DISTRIBUTION
The Company may sell Securities (1) through underwriters or dealers,
(2) directly to one or more purchasers, or (3) through agents. A
Prospectus Supplement will set forth the terms of the offering of the
Securities offered thereby, including the name or names of any
underwriters, the purchase price of the Securities, and the proceeds to
the Company from the sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering
price, any discounts or concessions allowed or reallowed or paid to
dealers, and any securities exchange on which the Securities may be
listed. Only underwriters so named in the Prospectus Supplement are
deemed to be underwriters in connection with the Securities offered
thereby.
If underwriters are used in the sale in a firm commitment
underwriting, the Securities will be acquired by the underwriters for
their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the Securities will be
subject to certain conditions precedent, and the underwriters will be
obligated to purchase all the Securities of the series offered by the
Company's Prospectus Supplement if any of the Securities are purchased.
Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to
time.
Securities may also be sold directly by the Company or through agents
designated by the Company from time to time. The Securities offered
hereby may also be sold from time to time through agents for the Company
by means of (i) ordinary broker's transactions, (ii) block transactions
(which may involve crosses) in accordance with the rules of the
Exchanges, in which such agents may attempt to sell Securities as agent
but may purchase and resell all or a portion of the blocks as principal,
(iii) "fixed price offerings" in accordance with the rules of the
Exchanges, or (iv) a combination of any such methods of sale. In
connection therewith, distributors' or sellers' commissions may be paid
or allowed which will not exceed those customary in the types of
transactions involved. A Prospectus Supplement sets forth the terms of
any such "fixed price offering," "exchange distributions" and "special
offerings." If the agent purchases Securities as principal, it may sell
such Securities by any of the methods described above. Any agent
involved in the offering and sale of Securities in respect of which this
Prospectus is delivered is named, and any commissions payable by the
Company to such agent are set forth, in the Prospectus Supplement.
Unless otherwise indicated herein or in the Prospectus Supplement,
any such agent is acting on a best-efforts basis for the period of its
appointment.
If so indicated in the Prospectus Supplement, the Company will
authorize agents, underwriters, or dealers to solicit offers by certain
institutional investors to purchase Securities providing for payment and
delivery on a future date specified in the Prospectus Supplement. There
may be limitations on the minimum amount which may be purchased by any
such institutional investor or on the portion of the aggregate principal
amount of the particular Securities which may be sold pursuant to such
arrangements. Institutional investors to which such offers may be made,
when authorized, include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and
charitable institutions, and such other institutions as may be approved
by the Company. The obligations of any such purchasers pursuant to such
delayed delivery and payment arrangements will not be subject to any
conditions except (1) the purchase by an institution of the particular
Securities shall not at the time of delivery be prohibited under the
laws of any jurisdiction in the United States to which such institution
is subject, and (2) if the particular Securities are being sold to
underwriters, the Company shall have sold to such underwriters the total
principal amount of such Securities less the principal amount thereof
covered by such arrangements. Underwriters will not have any
responsibility in respect of the validity of such arrangements or the
performance of the Company or such institutional investors thereunder.
Agents and underwriters may be entitled under agreements entered into
with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933, or
to contribution with respect to payments which the agents or
underwriters may be required to make in respect thereof. Agents and
underwriters may engage in transactions with, or perform services for,
the Company in the ordinary course of business.
FEDERAL INCOME TAX CONSIDERATIONS
Federal Income Taxation of Shareholders
The following section is a general summary of certain federal income
tax aspects of an investment in the Company that should be considered by
prospective shareholders. The discussion in this section is based on
existing provisions of the Code, existing and proposed Treasury
regulations, existing court decisions, and existing rulings and other
administrative interpretations. There can be no assurance that future
Code provisions or other legal authorities will not alter significantly
the tax consequences described below. No rulings have been obtained
from the Internal Revenue Service concerning any of the matters
discussed in this section.
The Company and its qualified REIT subsidiaries (collectively
"Resource REIT") believes it has complied, and intends to comply in the
future, with the requirements for qualification as a REIT under the
Code. The federal income tax provisions governing REITs and their
shareholders are extremely complicated, and what follows is only a very
brief and general summary of the most important considerations for
shareholders. ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SHARES OF THE
COMPANY.
General Considerations
Resource REIT believes it has complied, and intends to comply in the
future, with the requirements for qualification as a REIT under the
Code. Venable, Baetjer and Howard, counsel to the Company, has given
the Company its opinion to the effect that, as of the date hereof and
based on the various representations made to it by the Company with
respect to its income, assets, and activities since its inception, and
subject to certain assumptions and qualifications stated in such
opinion, (i) Resource REIT qualifies for treatment as a REIT under the
Code and (ii) the organization and contemplated method of operation of
Resource REIT are such as to enable it to continue so to qualify in
subsequent years, provided the various operational requirements of REIT
status are satisfied in those years. However, investors should be aware
that opinions of counsel are not binding on the courts or the Internal
Revenue Service. To the extent that Resource REIT qualifies as a REIT
for federal income tax purposes, it generally will not be subject
to federal income tax on the amount of its income or gain that is
distributed to shareholders. However, a nonqualified REIT subsidiary of
the Company , which operates the MPP and is included in the Company's
consolidated GAAP financial statements, is not a qualified REIT
subsidiary. Consequently, all of the nonqualified REIT subsidiary's
taxable income is subject to federal and state income taxes.
The REIT rules generally require that a REIT invest primarily in real
estate-related assets, its activities be passive rather than active, and
it distribute annually to its shareholders a high percentage of its
taxable income. The Company could be subject to a number of taxes if it
failed to satisfy those rules or if it acquired certain types of
income-producing real property through foreclosure. Although no
complete assurances can be given, the Company does not expect that it
will be subject to material amounts of such taxes.
Resource REIT's failure to satisfy certain Code requirements could
cause the Company to lose its status as a REIT. If Resource REIT failed
to qualify as a REIT for any taxable year, it would be subject to
federal income tax (including any applicable minimum tax) at regular
corporate rates and would not receive deductions for dividends paid to
shareholders. As a result, the amount of after-tax earnings available
for distribution to shareholders would decrease substantially. While
the Board of Directors intends to cause Resource REIT to operate in a
manner that will enable it to qualify as a REIT in all future taxable
years, there can be no certainty that such intention will be realized
because, among other things, qualification hinges on the conduct of the
business of Resource REIT.
Taxation of Distributions by the Company
Assuming that Resource REIT maintains its status as a REIT, any
distributions that are properly designated as "capital gain dividends''
generally will be taxed to shareholders as long-term capital gains,
regardless of how long a shareholder has owned his shares. Any other
distributions out of Resource REIT current or accumulated earnings and
profits will be dividends taxable as ordinary income. Shareholders will
not be entitled to dividends-received deductions with respect to any
dividends paid by Resource REIT. Distributions in excess of Resource
REIT's current or accumulated earnings and profits will be treated as
tax-free returns of capital, to the extent of the shareholder's basis in
his shares of Common Stock, and as gain from the disposition of shares,
to the extent they exceed such basis. Shareholders may not include on
their own returns any of Resource REIT ordinary or capital losses.
Distributions to shareholders attributable to "excess inclusion income''
of Resource REIT will be characterized as excess inclusion income in the
hands of the shareholders. Excess inclusion income can arise from
Resource REIT's holdings of residual interests in real estate mortgage
investment conduits and in certain other types of mortgage-backed
security structures created after 1991. Excess inclusion income
constitutes unrelated business taxable income ("UBTI'') for tax-exempt
entities (including employee benefit plans and individual retirement
accounts), and it may not be offset by current deductions or net
operating loss carryovers. In the unlikely event that the Company's
excess inclusion income is greater than its taxable income, the
Company's distribution would be based on the Company's excess inclusion
income. In 1992 the Company's excess inclusion income was less than 10%
of its taxable income. Although Resource REIT itself would be subject
to a tax on any excess inclusion income that would be allocable to a
"disqualified organization'' holding its shares, Resource REIT's by-laws
provide that disqualified organizations are ineligible to hold Resource
REIT's shares.
Dividends paid by Resource REIT to organizations that generally are
exempt from federal income tax under Section 501(a) of the Code should
not be taxable to them as UBTI except to the extent that (i) purchase of
Shares of Resource REIT was financed by "acquisition indebtedness,''
(ii) such dividends constitute excess inclusion income or (iii) with
respect to the trusts owning more than 10% of the shares of Resource
REIT, under certain circumstances a portion of such dividend is
attributable to UBTI. Because an investment in Resource REIT may give
rise to UBTI or trigger the filing of an income tax return that
otherwise would not be required, tax-exempt organizations should give
careful consideration to whether an investment in Resource REIT is
prudent.
Taxation of Dispositions of Shares of the Common Stock
In general, any gain or loss realized upon a taxable disposition
of shares will be treated as long-term capital gain or loss if the
shares have been held for more than twelve months and otherwise as
short-term capital gain or loss. However, any loss realized upon a
taxable disposition of shares held for six months or less will be
treated as long-term capital loss to the extent of any capital gain
dividends received with respect to such shares. All or a portion of any
loss realized upon a taxable disposition of Shares of Resource REIT may
be disallowed if other Shares of Resource REIT are purchased (under a
dividend reinvestment plan or otherwise) within 30 days before or after
the disposition.
Backup Withholding
Resource REIT generally is required to withhold and remit to the
United States Treasury 31% of the dividends paid to any shareholder who
(i) fails to furnish Resource REIT with a correct taxpayer
identification number, (ii) has notified Resource REIT that a
shareholder has underreported dividend or interest income to the
Internal Revenue Service, or (iii) under certain circumstances, fails to
certify to Resource REIT that he is not subject to backup withholding.
An individual's taxpayer identification number is his social security
number.
Debt Securities
The Debt Securities will be taxable as indebtedness. Interest and
original issue discount, if any, on a Debt Security will be treated as
ordinary income to a holder. Any special tax considerations applicable
to a Debt Security will be described in the related Prospectus
Supplement.
Exercise of Securities Warrants
Upon a holder's exercise of a Securities Warrant, the holder will, in
general, (i) not recognize any income, gain or loss for federal income
tax purposes, (ii) receive an initial tax basis in the Security received
equal to the sum of the holder's tax basis in the exercised Securities
Warrant and the exercise price paid for such Security and (iii) have a
holding period for the Security received beginning on the date of
exercise.
Sale or Expiration of Securities Warrants
If a holder of a Securities Warrant sells or otherwise disposes of
such Securities Warrant (other than by its exercise), the holder
generally will recognize capital gain or loss (long term capital gain or
loss if the holder's holding period for the Securities Warrant exceeds
twelve months on the date of disposition; otherwise, short term capital
gain or loss) equal to the difference between (i) the cash and fair
market value of other property received and (ii) the holder's tax basis
(on the date of disposition) in the Securities Warrant sold. Such a
holder generally will recognize a capital loss upon the expiration of an
unexercised Securities Warrant equal to the holder's tax basis in the
Securities Warrant on the expiration date.
State and Local Tax Considerations
State and local tax laws may not correspond to the federal income tax
principles discussed in this section. Accordingly, prospective investors
should consult their tax advisers concerning the state and local tax
consequences of an investment in Resource REIT.
LEGAL OPINIONS
The validity of the Shares will be passed upon for the Company by
Venable, Baetjer and Howard (a partnership which includes professional
corporations), Baltimore, Maryland.
EXPERTS
The consolidated financial statements and schedules of the Company
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1992, amended as reflected in the Form 10-K/A for the year
ended December 31, 1992, which is incorporated in this Prospectus and
Registration Statement by reference, have been audited by KPMG Peat
Marwick, independent certified public accountants. Such financial
statements and schedules have been incorporated by reference
herein in reliance upon the reports of that firm and upon the authority
of that firm as experts in auditing and accounting.
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses, other than underwriting discounts and
commissions, in connection with the offerings of Securities are:
Registration Fee $ 62,500
Legal Fees and Expenses *
Accounting Fees and Expenses *
Blue Sky Qualification and Expenses including Counsel Fees *
New York Stock Exchange Listing Fee *
Printing and Engraving Expenses *
Transfer Agent and Registrar Fees *
Miscellaneous *
------
TOTAL $ *
======
- -----------------
* To be supplied by amendment or incorporated by reference to periodic
reports filed by the Company pursuant to Section 13 of the Securities
Exchange Act of 1934.
Item 15. Indemnification of Directors and Officers
The Virginia Stock Corporation Act and the Company's Articles of
Incorporation provide for indemnification of the Company's directors and
officers in a variety of circumstances, which may include liabilities
under the Securities Act of 1933. The Company's Articles of
Incorporation require indemnification of directors and officers with
respect to certain liabilities, expenses, and other amounts imposed on
them by reason of having been a director or officer, except in the case
of willful misconduct or a knowing violation of criminal law. The
Company also carries insurance on behalf of directors, officers,
employees or agents which may cover liabilities under the Securities Act
of 1933. In addition, the Virginia Stock Corporation Act and the
Company's Articles of Incorporation eliminate the liability of a
director or officer of the Company in a shareholder or derivative
proceeding except in the event of willful misconduct or a knowing
violation of the criminal law or of federal or state securities laws.
Item 16. Exhibits
*1.1 - Form of Underwriting Agreement
4.1 - Form of Common Stock Certificate (incorporated herein by
reference to Amendment No. 3 of the Company's Registration
Statement on Form S-11 (No. 33-19261) dated February 10, 1988
4.2 - Articles of Incorporation (incorporated herein by reference
to the Company's Registration Statement on Form S-3 (No. 33-
53494), dated October 20, 1992)
*4.3 - Specimen of Articles Supplementary relating to Preferred
Stock
4.4 - Form of Senior Indenture
4.5 - Form of Subordinated Indenture
*4.6 - Form of Common Stock Warrant Agreement
*4.7 - Form of Preferred Stock Warrant Agreement
*4.8 - Form of Debt Warrant Agreement
5.1 - Opinion of Venable, Baetjer and Howard
*8.1 - Tax Opinion of Venable, Baetjer and Howard
**12.1 - Ratio of Available Earnings to Fixed Charges
23.1 - Consent of KPMG Peat Marwick
23.2 - Consent of Venable, Baetjer and Howard (contained in Exhibits
5.1 and 8.1)
24.1 - Power of Attorney relating to amendments (previously filed)
*25.1 - Statement of Eligibility of Trustee on Form T-1 (to be filed
under separate cover)
* To be filed by amendment or incorporated by reference to periodic
reports filed by the Company pursuant to Section 13 of the Securities
Exchange Act of 1934.
** Exhibit not provided because information is readily available from
basic financial statements.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from the registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include
any financial statements required by Rule 3-19 of Regulation S-X
at the start of any delayed offering or throughout a continuous
offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section
13(a) of 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the response to
Item 15, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefor, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For the purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b) (1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has caused this
Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Columbia, and
the State of Maryland, on January 28, 1994.
RESOURCE MORTGAGE CAPITAL, INC.
Thomas H.Potts
--------------------------------
Thomas H. Potts, President
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed by the following
persons in the capacities indicated on January 28, 1994.
Signature Capacity
--------- ---------
Thomas H. Potts President and Director
- ----------------------
Thomas H. Potts (Principal Executive Officer)
Lynn K. Geurin Executive Vice President,
- ----------------------
Lynn K. Geurin (Principal Financial and
Accounting Officer)
* Director
- ----------------------
J. Sidney Davenport, IV
* Director
- ----------------------
Richard C. Leone
* Director
- ----------------------
Paul S. Reid
* Director
- ----------------------
Donald B. Vaden
* By Thomas H. Potts
---------------
Attorney-in-fact
EXHIBIT INDEX
Exhibit Sequentially
- ------
Numbered Page
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4.4 Form of Senior Indenture
4.5 Form of Subordinated Indenture
5.1 Opinion of Venable, Baetjer and Howard
23.1 Consent of KPMG Peat Marwick