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
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
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
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
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
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.
(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
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,
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;
(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
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
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;
(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
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.
(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.
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.
(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.
(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).
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).
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]
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
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