SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-9977
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Maryland 86-0611231
(State or Other Jurisdiction) (I.R.S.Employer
of Incorporation or Organization) Identification No.)
5333 North 7th Street,Suite 219 85014
Phoenix, Arizona (Zip Code)
(Address of Principal Executive Offices)
(602) 265-8541
(Registrant's Telephone Number,Including Area Code)
Not Applicable
Former Name,Former Address and Former Fiscal Year,
if Changed Since Last Report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes X No .
---- ----
As of August 10, 1995; 9,716,517 shares of Homeplex Mortgage Investments
Corporation common stock were outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1 Financial Statements
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION
CONSOLIDATED BALANCE SHEETS
As Of June 30, 1995 and December 31, 1994
(Dollars In Thousands Except Share Data)
(Unaudited)
June 30, Dec. 31,
1995 1994
----------- -----------
ASSETS
Real estate loans .............................. $ 6,095 $ 9,260
Residual interests ............................. 6,554 7,654
Funds held by Trustee .......................... 6,246 6,720
Cash and cash equivalents ...................... 10,193 6,666
Other assets ................................... 543 850
----------- -----------
Total Assets ................................... $ 29,631 $ 31,150
=========== ===========
LIABILITIES
Long-term debt ................................. $ 9,801 $ 11,783
Accounts payable and other liabilities ......... 1,294 1,416
Accrued interest payable ....................... 96 115
Dividend payable ............................... -- 194
----------- -----------
Total Liabilities .............................. 11,191 13,508
----------- -----------
Contingencies
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share;
50,000,000 shares authorized;
issued and outstanding - 9,875,655 shares .... 99 99
Additional paid-in capital ..................... 84,046 84,046
Cumulative net loss ............................ (24,056) (24,854)
Cumulative dividends ........................... (41,239) (41,239)
Treasury stock - 159,138 shares ................ (410) (410)
----------- -----------
Total Stockholders' Equity ..................... 18,440 17,642
----------- -----------
Total Liabilities and Stockholders' Equity ..... $ 29,631 $ 31,150
=========== ===========
See notes to consolidated financial statements.
<PAGE>
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF NET INCOME (LOSS)
For The Three and Six Months Ended June 30, 1995 and 1994
(Dollars In Thousands Except Per Share Data)
(Unaudited)
Three Months Six Months
Ended June 30 Ended June 30,
------------- --------------
1995 1994 1995 1994
---- ---- ---- ----
INCOME
Interest income on real
estate loans .......... $ 622 $ 283 $ 1,197 $ 401
Income (loss) from
residual interests .... 335 (687) 750 (649)
Other income ............. 121 71 234 87
----------- ----------- ----------- -----------
Total Income (Loss) ...... 1,078 (333) 2,181 (161)
----------- ----------- ----------- -----------
EXPENSES
Interest ................. 228 363 478 792
General, administrative
and other ............. 515 398 905 816
----------- ----------- ----------- -----------
Total Expenses ........... 743 761 1,383 1,608
----------- ----------- ----------- -----------
Net Income (Loss) ........ $ 335 $ (1,094) $ 798 $ (1,769)
=========== =========== =========== ===========
SHARE DATA
Net Income (Loss)
Per Share ............. $ .03 $ (.11) $ .08 $ (.18)
=========== =========== =========== ===========
Weighted Average Number
Of Shares Of Common
Stock And Common
Stock Equivalents
Outstanding ........... 9,736,320 9,718,000 9,730,905 9,724,708
=========== =========== =========== ===========
See notes to consolidated financial statements.
<PAGE>
<TABLE>
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For The Six Months Ended June 30, 1995
(Dollars In Thousands)
(Unaudited)
<CAPTION>
Additional Cumulative
Number Par Paid-In Net Income Cumulative Treasury
Of Shares Value Capital (Loss) Dividends Stock Total
--------- ----- --------- ------------- ----------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1994 ........... 9,875,655 $ 99 $ 84,046 $ (24,854) $ (41,239) $ (410) $ 17,642
Net income .................... -- -- -- 798 -- -- 798
--------- --------- --------- --------- --------- --------- ---------
Balance at
June 30, 1995 ............... 9,875,655 $ 99 $ 84,046 $ (24,056) $ (41,239) $ (410) $ 18,440
========= ========= ========= ========= ========= ========= =========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Six Months Ended June 30, 1995 and 1994
Increase (Decrease) In Cash
(Dollars In Thousands)
1994 1995
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ........................................ $ 798 $ (1,769)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
(Increase) decrease in other assets ................... 250 (52)
Decrease in accounts payable and other liabilities .... (122) (11)
Amortization of debt costs ............................ 57 134
Decrease in accrued interest payable .................. (19) (53)
Net write-downs on residual interests ................. -- 1,493
Amortization of hedging costs ......................... -- 96
-------- --------
Net Cash Provided by (Used In) Operating Activities ...... 964 (162)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Principal payments received on real estate loans ......... 5,790 202
Real estate loans funded ................................. (2,625) (4,978)
Amortization of residual interests ....................... 1,100 3,889
Decrease in funds held by Trustee ........................ 474 1,583
-------- --------
Net Cash Provided By Investing Activities ................ 4,739 696
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments made on long-term debt ................ (1,982) (5,479)
Dividends paid ........................................... (194) (292)
Repurchases of common stock .............................. -- (17)
-------- --------
Net Cash Used In Financing Activities .................... (2,176) (5,788)
-------- --------
Net Increase (Decrease) In Cash .......................... 3,527 (5,254)
Cash And Cash Equivalents At Beginning Of Period ......... 6,666 16,247
-------- --------
Cash And Cash Equivalents At End Of Period ............... $ 10,193 $ 10,993
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for interest ................................... $ 440 $ 711
======== ========
See notes to consolidated financial statements.
<PAGE>
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
NOTE 1 - ORGANIZATION
Homeplex Mortgage Investments Corporation, a Maryland corporation, (the
Company) commenced operations in July 1988. As described in Note 4 the Company
has purchased interests in mortgage certificates securing collateralized
mortgage obligations (CMOs) and interests relating to mortgage participation
certificates (MPCs) (collectively residual interests). Since December 1993 the
Company has originated various loans secured by real estate (see Note 3).
The accompanying interim financial statements do not include all of the
information and disclosures generally required for annual financial statements.
In the opinion of management, however, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three and six months ended June 30, 1995 and
1994 are not necessarily indicative of the results that may be expected for the
entire year. These financial statements should be read in conjunction with the
December 31, 1994 financial statements and notes thereto.
NOTE 2 - GENERAL AND SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of Homeplex
Mortgage Investments Corporation and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.
Income Taxes
The Company has elected to be taxed as a real estate investments trust
(REIT) under the Internal Revenue Code. As a REIT, the Company must distribute
annually at least 95% of its taxable income to its stockholders.
At December 31, 1994, the Company has available, for income tax purposes,
a net operating loss carryforward of approximately $58,000,000. Such loss may be
carried forward, with certain restrictions, for up to 15 years to offset future
taxable income, if any. Until the tax loss carryforward is fully utilized or
expires, the Company will not be required to pay dividends to its stockholders
except for income that is deemed to be excess inclusion income.
The income (loss) reported in the accompanying financial statements is
different than taxable income (loss) because some income and expense items are
reported in different periods for income tax purposes. The principal differences
relate to the amortization of residual interests and the treatment of stock
option expense.
Residual Interests
Interests relating to mortgage participation certificates and residual
interest certificates are accounted for as described in Note 4.
Cash and Cash Equivalents
Cash and cash equivalents include demand deposits and certificates of
deposit with maturities of less than three months.
Amortization of Hedging
The cost of the Company's LIBOR ceiling rate agreements (see Note 7) were
amortized using the straight-line method over the lives of the agreements. Other
expense includes $47,000 and $96,000, respectively, related to amortization of
hedging costs for the three and six months ended June 30, 1994.
Net Income (Loss) Per Share
Primary net income (loss) per share is calculated using the weighted
average shares of common stock outstanding and common stock equivalents. Common
stock equivalents consist of dilutive stock options. Net income (loss) per share
is the same for both primary and fully diluted calculations.
Reclassification
Certain balances in the prior year have been reclassified to conform to
the current year's presentation.
NOTE 3 - REAL ESTATE LOANS
<TABLE>
The following is a summary of real estate loans at June 30, 1995:
<CAPTION>
Interest Payment Principal and
Description Rate Terms Carrying Amount (1)
----------- -------- ----------------------------- -------------------
<S> <C> <C> <C>
First Deed of Trust on 16% Interest only monthly, $ 2,360,000
33 acres of land in principal due October 31,
Scottsdale, Arizona. 1995; may be extended for
one year under certain terms
and conditions.
First Deed of Trust on 16% Interest only monthly, 2,272,000
33 acres of land in principal due November
Tempe, Arizona. 21, 1995.
First Deed of Trust on 16% Interest only monthly, 1,463,000
21.4 acres of land in principal due January 6,
Tempe, Arizona. 1996; may be extended
for one year under cer-
tain terms and conditions.
$ 6,095,000
(1) Also represents cost for federal income tax purposes.
</TABLE>
At June 30, 1995, all of the Company's loans are secured by properties
located in Arizona. As a result of this geographic concentration, unfavorable
economic conditions in Arizona could increase the likelihood of defaults on
these loans and affect the Company's ability to protect the principal and
interest on such loans following foreclosures upon the real properties securing
such loans.
NOTE 4 - RESIDUAL INTERESTS
The Company owns residual interests in collateralized mortgage
obligations (CMOs) and residual interests in mortgage participation certificates
(MPCs) (collectively residual interests) with respect to which elections to be
treated as a real estate mortgage investment conduit (REMIC) have been made.
Residual Interest Certificates
The Company owns 100% of the residual interest certificates representing
the residual interests in five series of CMOs secured by mortgage certificates
and cash funds held by trustee. The CMOs have been issued through Westam
Mortgage Financial Corporation (Westam) or American Southwest Financial
Corporation (ASW). The mortgage certificates securing the CMOs all have fixed
interest rates. Certain of the classes of CMOs have fixed interest rates and
certain have interest rates that are determined monthly based on the London
Interbank Offered Rates (LIBOR) for one month Eurodollar deposits, subject to
specified maximum interest rates.
Each series of CMOs consists of several serially maturing classes
collateralized by mortgage certificates. Generally, principal payments received
on the mortgage certificates, including prepayments on such mortgage
certificates, are applied to principal payments on the classes of CMOs in
accordance with the respective indentures. Scheduled payments of principal and
interest on the mortgage certificates securing each series of CMOs and
reinvestment earnings thereon are intended to be sufficient to make timely
payments of interest on such series and to retire each class of such series by
its stated maturity. Certain series of CMOs are subject to redemption according
to specific terms of the respective indentures.
The Company's residual interest certificates entitle the Company to
receive the excess, if any, of payments received from the pledged mortgage
certificates together with reinvestment income thereon over amounts required to
make debt service payments on the related CMOs and to pay related administrative
expenses of the REMICs. The Company also has the right, under certain
conditions, to cause an early redemption of the CMOs. Under the early redemption
feature, the mortgage certificates are sold at the then current market price and
the CMOs repaid at par value. The Company is entitled to any excess cash flow
from such early redemptions. The conditions under which such early redemptions
may be elected vary but generally cannot be done until the remaining outstanding
CMO balance is less than 10% of the original balance.
Interests In Mortgage Participation Certificates
The Company owns residual interests in REMICs with respect to three
separate series of Mortgage Participation Certificates (MPCs) issued by the
Federal Home Loan Mortgage Corporation (FHLMC) or by the Federal National
Mortgage Association (FNMA). The Company's MPC residual interests entitle the
Company to receive its proportionate share of the excess (if any) of payments
received from the mortgage certificates underlying the MPCs over principal and
interest required to be passed through to the holders of such MPCs. The Company
is not entitled to reinvestment income earned on the underlying mortgage
certificates, is not required to pay any administrative expenses related to the
MPCs and does not have the right to elect early termination of any of the MPC
classes. The mortgage certificates underlying the MPCs all have fixed interest
rates. Certain of the classes of the MPCs have fixed interest rates and certain
have interest rates that are determined monthly based on LIBOR or based on the
Monthly Weighted Average Cost of Funds (COFI) for Eleventh District Savings
Institutions as published by the Federal Home Loan Bank of San Francisco,
subject to specified maximum interest rates.
The following summarizes the Company's investment in residual interests
at June 30, 1995:
Company's
Type Of Company's Percentage
Series Investments Amortized Cost Ownership
------ ----------- -------------- ----------
(In Thousands)
Westam 1 Residual Interest Certificate $ 945 100.00%
Westam 3 Residual Interest Certificate 55 100.00%
Westam 5 Residual Interest Certificate 270 100.00%
Westam 6 Residual Interest Certificate 28 100.00%
ASW 65 Residual Interest Certificate 2,866 100.00%
FHLMC 17 Interest in MPCs 178 100.00%
FNMA 1988-24 Interest in MPCs 1,485 20.20%
FNMA 1988-25 Interest in MPCs 727 45.07%
-------
$6,554
=======
The following summarizes the Company's proportionate interest in the
aggregate assets and liabilities of the eight residual interests at June 30,
1995 (in thousands):
Assets:
Outstanding Principal Balance of Mortgage Certificates ..... $ 396,766
Funds Held By Trustee and Accrued Interest Receivable ...... 9,442
---------
$ 406,208
Range of Stated Coupon of Mortgage Certificates ............ 9.0% - 10.5%
Liabilities:
Outstanding Principal Balance of CMOs and MPCs:
Fixed Rate ............................................... 350,560
Floating Rate - LIBOR Based .............................. 44,484
Floating Rate - COFI Based ............................... 5,000
Total ...................................... 400,044
Accrued Interest Payable ................................... 2,680
---------
$ 402,724
Range of Stated Interest Rates on CMOs and MPCs ............ 0% to 9.9%
The average LIBOR and COFI rates used to determine income from residual
interests were as follows:
Three Months Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994 June 30, 1995
---- ---- ---- ---- -------------
LIBOR ......... 6.08% 4.00% 6.07% 3.67% 6.06%
COFI .......... 5.00% 3.66% 4.78% 3.73% 5.06%
The Company accounts for residual interests using the prospective net
level yield method. Under this method, a residual interest is recorded at cost
and amortized over the life of the related CMO or MPC issuance. The total
expected cash flow is allocated between principal and interest as follows:
1. An effective yield is calculated as of the date of purchase based on
the purchase price and anticipated future cash flows.
2. In the initial accounting period, interest income is accrued on the
investment balance using the effective yield calculated as of the
date of purchase.
3. Cash received on the investment is first applied to accrued interest
with any excess reducing the recorded principal balance of the
investment.
4. At each reporting date, the effective yield is recalculated based on
the amortized cost of the investment and the then-current estimate
of the remaining future cash flows.
5. The recalculated effective yield is then used to accrue interest
income on the investment balance in the subsequent accounting
period.
6. The above procedure continues until all cash flows from the
investment have been received.
At the end of each period, the amortized balance of the investment should
equal the present value of the estimated cash flows discounted at the
newly-calculated effective yield.
In May 1993 the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". SFAS No. 115 is applicable
to debt securities including investments in REMIC residual interests and
requires all investments to be classified into one of three categories: held to
maturity, available for sale, or trading. The Company acquired its residual
interests without the intention to resell the assets. The Company has both the
intent and ability to hold these investments to maturity and believes these
investments meet the "held to maturity" criteria of SFAS No. 115. Under SFAS No.
115, if a residual interest is determined to have other than temporary
impairment, the residual interest is written down to fair value. For the three
and six months ended June 30, 1994, the Company incurred net charges of
$1,178,000 and $1,493,000, respectively, to record impaired residual interests
at fair value. There were no charges for the three and six months ended June 30,
1995.
At June 30, 1995, the estimated prospective net level yield of the
Company's residual interests, in the aggregate, is 20% without early redemptions
or terminations being considered and 43% if early redemptions or terminations
are considered. At June 30, 1995, the estimated fair value of the Company's
residual interests, in the aggregate, approximates the Company's aggregate
carrying value.
The projected yield and estimated fair value of the Company's residual
interests are based on prepayment and interest rate assumptions at June 30,
1995. There will be differences, which may be material, between the projected
yield and the actual yield and the fair value of the residual interests may
change significantly over time.
NOTE 5 - LONG-TERM DEBT
On December 17, 1992, a wholly owned, limited purpose subsidiary of the
Company issued $31,000,000 of Secured Notes under an Indenture to a group of
institutional investors. The Notes bear interest at 7.81% and require quarterly
payments of principal and interest with the balance due on February 15, 1998. In
connection with the financing, the Company paid fees of $635,000 which are
included in other assets in the accompanying consolidated balance sheet and are
being amortized to interest expense over the life of the financing. The Notes
are secured by the Company's residual interests in Westam 1, Westam 3, Westam 5,
Westam 6, ASW 65, FNMA 1988-24 and FNMA 1988-25 (see Note 4), and by Funds held
by the Note Trustee. The Company used $3,100,000 of the proceeds to establish a
reserve fund. The reserve fund, which has a specified maximum balance of
$7,750,000, is to be used to make the scheduled principal and interest payments
on the Notes if the cash flow available from the collateral is not sufficient to
make the scheduled payments. Depending on the level of certain specified
financial ratios relating to the collateral, the cash flow from the collateral
is required to either prepay the Notes at par, increase the reserve fund up to
its $7,750,000 maximum or is remitted to the Company. At June 30, 1995, Funds
held by Trustee consists of $5,678,000 in the reserve fund and $568,000 of other
funds pledged under the Indenture.
NOTE 6 - SHORT-TERM BORROWINGS
Under a revolving line of credit agreement with a bank, the Company may
borrow up to $5,000,000, upon payment of a 1/2% commitment fee with interest
payable monthly at prime plus 1/2%. Such advances are to be secured by certain
of the Company's real estate loans with the amount advanced equal to between 40%
to 60% of the principal amount of the real estate loans pledged. Only real
estate loans approved by the bank are eligible for advances. The agreement
contains certain financial covenants and expires on May 5, 1996. Through June
30, 1995, the Company has not drawn upon the line of credit.
NOTE 7 - HEDGING
On May 12, 1992, the Company entered into a LIBOR ceiling rate agreement
with a bank for a fee of $245,000. The agreement, which had a term of two years
beginning July 1, 1992, required the bank to pay a monthly amount to the Company
equal to the product of $175,000,000 multiplied by the percentage, if any, by
which actual one-month LIBOR (measured on the first business day of each month)
exceeded 9.0%. Through the expiration of the agreement on July 1, 1994, LIBOR
remained under 9.0% and, accordingly, no amounts were paid under the agreement.
ITEM 2. Management's Discussion and Analysis of Financial Condition, Results
of Operations and Interest Rates and Other Information
Results of Operations For The Three And Six Months Ended June 30, 1995 and 1994
The Company had net income of $335,000 or $.03 per share and $798,000 or
$.08 per share, respectively, for the three and six months ended June 30, 1995
compared to net losses of $1,094,000 or $.11 per share and $1,769,000 or $.18
per share for the comparable periods in 1994.
The Company's income from mortgage assets was $1,078,000 and $2,181,000,
respectively, for the three and six months ended June 30, 1995 as compared to
losses of $333,000 and $161,000 for the comparable periods in 1994. The 1994
amounts are net of charges of $1,178,000 and $1,493,000, respectively, for the
three and six months ended June 30, 1994, to writedown the Company's residual
interests. See "Interest Rates and Prepayments".
Interest income on real estate loans increased from $283,000 and
$401,000, respectively, for the three and six months ended June 30, 1994 to
$622,000 and $1,197,000, respectively, for the comparable period in 1995 due to
the expansion of the Company's real estate lending programs. See "Liquidity,
Capital Resources and Commitments".
The Company's interest expense declined from $363,000 and $792,000,
respectively, for the three and six months ended June 30, 1994 to $228,000 and
$478,000 for the comparable periods in 1995 as a result of the Company reducing
its long-term debt.
Liquidity, Capital Resources and Commitments
The Company raised $80,593,000 in connection with its initial public
offering on July 27, 1988. The proceeds were immediately utilized to purchase
residual interests. Subsequently, through October 1988, the Company purchased an
additional $59,958,000 of residual interests which were initially financed using
a combination of borrowings under repurchase agreements and the Company's bank
line of credit. The Company has not purchased any residual interests since
October 1988.
Since December 1993, the Company has originated real estate loans secured
by various first deeds of trust on real properties located in Arizona. The
Company's loan program seeks higher returns by targeting loan opportunities to
which the Company can respond on a more timely basis than traditional real
estate lenders. At June 30, 1995, all of the Company's loans are secured by
properties located in Arizona. As a result of this geographic concentration,
unfavorable economic conditions in Arizona could increase the likelihood of
defaults on these loans and affect the Company's ability to protect the
principal and interest on such loans following foreclosures upon the real
properties securing such loans. The Company may, in the future, make loans on
properties located outside of Arizona. At June 30, 1995 the Company's real
estate loans outstanding total $6,095,000 and bear interest at 16%, payable
monthly, with all principal due within one year.
On December 17, 1992, a wholly owned limited-purpose subsidiary of the
Company issued $31,000,000 of Secured Notes under an Indenture to a group of
institutional investors. The Notes bear interest at 7.81% and require quarterly
payments of principal and interest with the balance due on February 15, 1998.
The Notes are secured by the Company's residual interests in Westam 1, Westam 3,
Westam 5, Westam 6, ASW 65, FNMA 1988-24 and FNMA 1988-25 and by funds held by
the Note Trustee. The Company used $3,100,000 of the proceeds to establish a
reserve fund. The reserve fund has a specified maximum balance of $7,750,000,
and is to be used to make the scheduled principal and interest payments on the
Notes if the cash flow available from the collateral is not sufficient to make
the scheduled payments. Depending on the level of certain specified financial
ratios relating to the collateral, the cash flow from the collateral is required
to either repay the Notes at par, increase the reserve fund up to its $7,750,000
maximum or is remitted to the Company. At June 30, 1995, $6,246,000 is held by
the Note Trustee in the reserve and other funds under the Indenture.
Under a revolving line of credit agreement with a bank, the Company may
borrow up to $5,000,000, upon payment of a 1/2% commitment fee with interest
payable monthly at prime plus 1/2%. Such advances are to be secured by certain
of the Company's real estate loans with the amount advanced equal to between 40%
to 60% of the principal amount of the real estate loans pledged. Only real
estate loans approved by the bank are eligible for advances. The agreement
contains certain financial covenants and expires on May 5, 1996. Through June
30, 1995, the Company has not drawn upon the line of credit.
As a real estate investment trust (REIT), the Company is not subject to
income tax at the corporate level as long as it distributes 95% of its taxable
income to its stockholders. At December 31, 1994, the Company has a net
operating loss carryforward, for income tax purposes, of approximately
$58,000,000. This tax loss may be carried forward, with certain restrictions,
for up to 15 years to offset future taxable income, if any. Until the tax loss
carryforward is fully utilized or expires, the Company will not be required to
distribute dividends to its stockholders except for income that is deemed to be
excess inclusion income. The Company anticipates that future cash flow from
operations will be used for payment of operating expenses and debt service with
the remainder, if any, available for investment in mortgage or real estate
related assets. At June 30, 1995, the Company has $10,193,000 of cash and cash
equivalents available for investment purposes.
Interest Rates and Prepayments
One of the Company's major sources of income is its income from residual
interests which consists of the Company's investment in eight real estate
mortgage investment conduits ("REMICs") as described in Note 4 to the financial
statements. The Company's cash flow and return on investment from its residual
interests are highly sensitive to the prepayment rate on the related mortgage
certificates and the variable interest rates on variable rate CMOs and MPCs.
At June 30, 1995, the Company's proportionate share of floating-rate CMOs
and MPCs in the eight REMICs is $44,484,000 in principal amount that pays
interest based on LIBOR and $5,000,000 in principal amount that pays interest
based on COFI. Consequently, absent any changes in prepayment rates on the
related mortgage certificates, increases in LIBOR and COFI will decrease the
Company's net income, and decreases in LIBOR and COFI will increase the
Company's net income. The average LIBOR and COFI rates were as follows:
Three Months Six Months
Ended June 30, Ended June 30, At June 30,
1995 1994 1995 1994 1995
---- ---- ---- ---- ----------
LIBOR.............................6.08% 4.00% 6.07% 3.67% 6.06%
COFI .............................5.00% 3.66% 4.78% 3.73% 5.06%
On May 12, 1992, the Company entered into a LIBOR ceiling rate agreement
with a bank for a fee of $245,000. The agreement, which had a term of two years
beginning July 1, 1992, required the bank to pay a monthly amount to the Company
equal to the product of $175,000,000 multiplied by the percentage, if any, by
which actual one-month LIBOR (measured on the first business day of each month)
exceeded 9.0%. Through the expiration of the agreement on July 1, 1994, LIBOR
remained under 9.0% and, accordingly, no amounts were paid under the agreement.
The Company's cash flow and return on investment from residual interests
also is sensitive to prepayment rates on the mortgage certificates securing the
CMOs and underlying the MPCs. In general, slower prepayment rates will tend to
increase the cash flow and return on investment on investment from interests.
The rate of principal prepayments on mortgage certificates is influenced by a
variety of economic, geographic, social and other factors. In general,
prepayments of the mortgage certificates should increase when the current
mortgage interest rates fall below the interest rates on the fixed rate mortgage
loans underlying the mortgage certificates. Conversely, to the extent that then
current mortgage interest rates exceed the interest rates on the mortgage loans
underlying the mortgage certificates, prepayments of such mortgage certificates
should decrease. Prepayment rates also may be affected by the geographic
location of the mortgage loans underlying the mortgage certificates, conditions
in mortgage loan, housing and financial markets, the assumability of the
mortgage loans and general economic conditions.
The low mortgage interest rates in effect during the first six months of
1994 caused significant mortgage refinancings, resulting in a writedown of the
Company's residual interests of $1,178,000 and $1,493,000, respectively, for the
three and six months ended June 30, 1994. Mortgage rates have subsequently
increased with a resulting decline in mortgage refinancing activity, therefore,
no writedowns were required for the three and six months ended June 30, 1995.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) The Company's 1995 Annual Meeting of Stockholders was
convened on June 13, 1995 and, at the direction of the
stockholders of the Company present in person or by proxy,
was adjourned and reconvened on June 15, 1995.
(b) The names of each director elected at the meeting are
designated below. There are no other directors whose terms
of office as directors continued after the meeting.
Alan D. Hamberlin
Mike Marusich
Mark A. McKinley
Gregory K. Norris
(c)(i) A vote was cast with respect to the election of the
nominated slate of directors to hold office until the
annual meeting of stockholders in 1996 and until their
successors are elected and qualified.
The following votes were cast for, against and withheld in
this matter:
For Against Withheld
--- ------- --------
Alan D. Hamberlin 3,385,193 0 1,530,969
Mike Marusich 3,382,238 0 1,533,924
Mark A. McKinley 3,384,913 0 1,531,249
Gregory K. Norris 3,383,843 0 1,532,319
(ii) A vote was cast with respect to the ratification of the
appointment of Kenneth Leventhal & Company as the
independent auditors of the Company for the fiscal year
ending December 31, 1995.
The following votes were cast for, against and withheld in
this matter:
For Against Withheld
--- ------- --------
4,274,883 315,418 325,861
ITEM 5. Other Information
Not applicable
ITEM 2. Exhibits and Reports on Form 8-K
(a) Exhibits;
Exhibit
Number
-------
3(b) Bylaws of the Registrant, dated June 30, 1995.
10(j) Revolving Loan Agreement, dated May 5, 1995
between the Registrant and Bank One, Arizona NA.
27 Exhibit 27, Financial Data Schedule
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf by the undersigned
thereunto duly authorized.
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION
August 10, 1995 By \JAY R. HOFFMAN
------------------------------------------
Jay R. Hoffman, Vice President
Treasurer, Chief Financial Officer
and a Duly Authorized Officer
BYLAWS
OF
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION
A Maryland Corporation
<PAGE>
BYLAWS
OF
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION
ARTICLE I.
---------
Stockholders
------------
Section 1. Annual Meetings.
- ---------------------------
The annual meeting of the stockholders of the Corporation
shall be held on such date within the month of June (or such other date within
each calendar year) as may be fixed from time to time by the Board of Directors.
Not less than ten nor more than 90 days' written or printed notice stating the
place, day and hour of each annual meeting shall be given in the manner provided
in Section 1 of Article IX hereof. The business to be transacted at the annual
meetings shall include the election of directors and any other business within
the power of the Corporation. All annual meetings shall be general meetings at
which any business may be considered without having been specified as a purpose
in the notice unless otherwise required by law.
Section 2. Special Meetings Called by Chairman of the Board, President or Board
- --------------------------------------------------------------------------------
of Directors.
- ------------
At any time in the interval between annual meetings, special
meetings of stockholders may be called by the Chairman of the Board, or by the
President, or by the Board of Directors. Not less than ten days' nor more than
90 days' written notice stating the place, day and hour of such meeting and the
matters proposed to be acted on thereat shall be given in the manner provided in
Section l of Article IX. No business shall be transacted at any special meeting
except that specified in the notice.
Section 3. Special Meeting Called by Stockholders.
- --------------------------------------------------
Upon the request in writing delivered to the Secretary by the
stockholders entitled to cast at least 25% of all the votes entitled to be cast
at the meeting, it shall be the duty of the Secretary to call a special meeting
of the stockholders. Such request shall state the purpose of such meeting and
the matters proposed to be acted on thereat, but no such meeting shall be
required to be called for the election of directors except under the
circumstances set forth in Section 10 of Article I or Sections 7(b) or 7(c) of
Article II of these Bylaws. The Secretary shall inform such stockholders of the
reasonably estimated costs of preparing and mailing the notice of the meeting,
and upon payment to the Corporation of such costs, the Secretary shall give not
less than ten nor more than 90 days' notice of the time, place and purpose of
the meeting in the manner provided in Section 1 of Article IX. Unless requested
by stockholders entitled to cast a majority of all the votes entitled to be cast
at the meeting, a special meeting need not be called to consider any matter
which is substantially the same as a matter voted on at any special meeting of
the stockholders held during the preceding 12 months.
Section 4. Place of Meetings.
- -----------------------------
All meetings of stockholders shall be held at the principal
executive offices of the Corporation or at such other place within the United
States as may be fixed from time to time by the Board of Directors and
designated in the notice.
Section 5. Quorum.
- ------------------
At any meeting of stockholders the presence in person or by
proxy of stockholders entitled to cast a majority of the votes entitled to be
cast at the meeting shall constitute a quorum. In the absence of a quorum, the
Chairman (or other presiding officer) of the meeting, or the stockholders
present in person or by proxy acting by majority vote, may adjourn the meeting
from time to time without notice other than by announcement at the meeting, but
not for a period exceeding 120 days after the record date, until a quorum shall
attend. The stockholders present in person or by proxy at a duly organized
meeting may continue to conduct business, notwithstanding withdrawal of enough
stockholders to leave less than a quorum.
Section 6. Adjourned Meetings.
- ------------------------------
A meeting of stockholders convened on the date for which it
was called (or one adjourned to achieve a quorum as above provided in Section 5
of this Article) may be adjourned from time to time by the Chairman (or other
presiding officer) of the meeting, or by the stockholders present in person or
by proxy acting by majority vote, without further notice except by announcement
at the meeting, to a date not more than 120 days after the record date, and any
business may be transacted at any adjourned meeting which could have been
transacted at the meeting as originally called.
Section 7. Voting.
- ------------------
A plurality of all the votes cast at a meeting of stockholders
duly called and at which a quorum is present shall be sufficient to elect a
director. Each share of stock may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted. A majority of the votes cast at a meeting of stockholders, duly called
and at which a quorum is present, shall be sufficient to take or authorize
action upon any other matter which may properly come before the meeting, unless
more than a majority of votes cast is required by statute or by the Charter or
these Bylaws. The Board of Directors may fix the record date for the
determination of stockholders entitled to vote in the manner provided in Article
VIII, Section 3 of these Bylaws. Unless otherwise provided in the Charter, each
outstanding share of stock, regardless of class, shall be entitled to one vote
on each matter submitted to a vote at a meeting of stockholders.
Section 8. Proxies.
- -------------------
A stockholder may vote the shares owned of record either in
person or by proxy executed in writing and signed by the stockholder or by duly
authorized attorney-in-fact. No proxy shall be valid after 11 months from its
date, unless otherwise provided in the proxy. In the case of stock held of
record by more than one person, any co-owner or co-fiduciary may execute the
proxy without the joinder of the co-owner(s) or co-fiduciary(ies), unless the
Secretary of the Corporation is notified in writing by any co-owner or
co-fiduciary that the joinder of more than one is to be required. At all
meetings of stockholders, the proxies shall be filed with and verified by the
Secretary of the Corporation, or, if the meeting shall so decide, by the
Secretary of the meeting.
Section 9. Order of Business.
- -----------------------------
At all meetings of stockholders, any stockholder present and
entitled to vote in person or by proxy shall be entitled to require, by written
request to the Chairman of the meeting, that the order of business shall be as
follows:
(1) Organization
(2) Proof of notice of meeting or of waivers thereof. (The
certificate of the Secretary of the Corporation, or the affidavit of any other
person who mailed or published the notice or caused the same to be mailed or
published, shall be proof of service of notice.)
(3) Submission by Secretary of the Corporation to the Chairman
(or other presiding officer) of the meeting of a list of the stockholders
entitled to vote, present in person or by proxy.
(4) A reading of unapproved minutes of preceding meetings of
stockholders and action thereon.
(5) Reports.
(6) If an annual meeting, or a special meeting called for that
purpose, the election of directors.
(7) Unfinished business.
(8) New business.
(9) Adjournment.
Section 10. Removal of Directors.
- ---------------------------------
At any special meeting of the stockholders called in the
manner provided for by this Article, the stockholders, by the affirmative vote
of a majority of all the votes entitled to be cast for the election of
directors, may remove any director or directors from office, with or without
cause, and may elect a successor or successors to fill any resulting vacancies
for the remainder of the term.
Section 11. Informal Action by Stockholders.
- --------------------------------------------
Any action required or permitted to be taken at any meeting of
stockholders may be taken without a meeting if a consent in writing setting
forth such action is signed by all the stockholders entitled to vote thereon and
such consent is filed with the records of stockholders' meetings.
Section 12 Advance Notice of Matters to be Presented at an Annual Meeting of
- -----------------------------------------------------------------------------
Stockholders.
- ------------
At an annual meeting of the stockholders, commencing with the
annual meeting to be held in 1996, only such business shall be conducted as
shall have been properly brought before the meeting as set forth below. To be
properly brought before an annual meeting, such business must (1) be specified
in the notice of the meeting (or any supplement thereto) given by the
Corporation pursuant to Section 1 of Article IX of these bylaws, or (2) be
brought before the meeting by or under the direction of the Board of Directors
(or the Chairman of the Board or the President), or (3) be properly brought
before the meeting by a stockholder. In addition to any other applicable
requirements, for business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary. To be timely, such stockholder's notice must be delivered to or
mailed and received by the Secretary at the principal executive offices of the
Corporation, not less than 20 days nor more than 30 days prior to the meeting
(or, with respect to a proposal required to be included in the Company's proxy
statement pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, or its
successor provision, the earlier date such proposal was received); provided,
however, that in the event that less than 30 days' notice or prior public
disclosure of the date of the meeting is given or made by the Corporation,
notice by the stockholder to be timely must be so received by the Secretary not
later than the close of business on the 10th day following the earlier of the
day on which the Corporation's notice of the date of the annual meeting was
mailed or the day on which the Corporation's first public disclosure of the date
of the annual meeting was made. A stockholder's notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address of the stockholder proposing such business,
(iii) the class and number of shares of the Corporation which are beneficially
owned by the stockholder, and (iv) any material interest of the stockholder in
such business.
Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 12.
The Chairman (or other presiding officer) at the meeting shall
have the authority, if the facts warrant, to determine that business was not
properly brought before the meeting in accordance with the provisions of this
Section 12, and if he should so determine, he shall so declare to the meeting
and any such business not properly brought before the meeting shall not be
transacted.
Section 13. Advance Notice of Nominees for Directors.
- -----------------------------------------------------
Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors at any meeting
of stockholders held after the annual meeting in 1995. Nominations of persons
for election to the Board of Directors of the Corporation may be made at an
annual meeting of stockholders or at a special meeting of stockholders as to
which the notice of meeting provides for election of directors, by or under the
direction of the Board of Directors, or by any nominating committee or person
appointed by the Board of Directors, or by any stockholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 13. Such nominations, other than
those made by or under the direction of the Board of Directors or by any
nominating committee appointed by the Board of Directors, shall be made pursuant
to timely notice in writing to the Secretary. To be timely, such stockholder's
notice shall be delivered to or mailed and received by the Secretary at the
principal executive offices of the Corporation not less than 20 days nor more
than 30 days prior to the meeting; provided, however, that in the event that
less than 30 days' notice or prior public disclosure of the date of the meeting
is given or made by the Corporation, notice by the stockholder to be timely must
be so received by the Secretary no later than the close of business on the 10th
day following the earlier of the day on which the Corporation's notice of the
date of the meeting was mailed or the day on which the Corporation's first
public disclosure of the date of the meeting was made. Such stockholder's notice
shall set forth: (a) as to each person whom the stockholder proposes to nominate
for election or re-election as a director, (i) the name, age, business address
and residence address of the person, (ii) the principal occupation or employment
of the person, (iii) the class and number of shares of stock of the Corporation
which are beneficially owned by the person, and (iv) any other information
relating to the person that is required to be disclosed in solicitations for
proxies for election of directors pursuant to Rule 14a under the Securities
Exchange Act of 1934 or any successor rule thereto; and (b) as to the
stockholder giving the notice, (i) the name and address of the stockholder and
(ii) the class and number of shares of the Corporation which are beneficially
owned by the stockholder. The Corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the Corporation
to determine the eligibility of such proposed nominee to serve as a director of
the Corporation. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth herein.
The Chairman (or other presiding officer) at the meeting shall
have the authority, if the facts warrant, to determine that a nomination was not
made in accordance with the foregoing procedure, and if he should so determine,
he shall so declare to the meeting and the defective nomination shall be
disregarded.
ARTICLE II.
----------
Directors
---------
Section 1. Powers.
- ------------------
The business and affairs of the Corporation shall be managed
under the direction of its Board of Directors. All powers of the Corporation may
be exercised by or under the authority of the Board of Directors except as
conferred on or reserved to the stockholders by law, by the Charter or by these
Bylaws. A director need not be a stockholder. The Board of Directors shall keep
minutes of its meetings and full and fair accounts of its transactions.
Section 2. Number; Term of Office; Removal.
- -------------------------------------------
The number of directors of the Corporation shall be not less
than three or the same number as the number of stockholders, whichever is less;
provided, however, that such number may be increased and thereafter decreased
from time to time by vote of a majority of the entire Board of Directors to a
number not exceeding 15. The directors elected at each annual meeting of
stockholders shall hold their office until the next annual meeting of
stockholders and until their successors are elected and qualify. A director may
be removed from office as provided in Article I, Section 10 of these Bylaws. If
the Corporation seeks to qualify as a real estate investment trust, a majority
of the Board of Directors at all times shall be "Independent Directors." As used
herein, the following terms shall have the following meanings: (a) "Independent
Director" shall mean a director of the corporation who is not an "Affiliate" of
an "Advisor" of the Corporation; (b) "Advisor" shall mean the person(s) or
entity responsible for directing or performing the day-to-day business affairs
of the corporation, including a person or entity to which an Advisor
subcontracts substantially all such functions; (c) "Affiliate" of a person shall
mean any person directly or indirectly owning, controlling or holding the power
to vote, five percent (5%) or more of the outstanding voting securities of such
other person or of any person directly or indirectly controlling, controlled by
or under common control with such other person; any person five percent (5%) or
more of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote by such other person; any person directly
or indirectly controlling, controlled by or under common control with, such
other person; and any officer, director, partner or employee of such other
person; and (d) "Person" shall mean a natural person, corporation, partnership,
trust company or other entity.
Section 3. Annual Meeting; Regular Meetings.
- --------------------------------------------
As soon as practicable after each annual meeting of
stockholders, the Board of Directors shall meet for the purpose of organization
and the transaction of other business. No notice of the annual meeting of the
Board of Directors need be given if it is held immediately following the annual
meeting of stockholders and at the same place. Other regular meetings of the
Board of Directors may be held at such times and at such places, within or
without the State of Maryland, as shall be designated in the notice for such
meeting by the party making the call. All annual and regular meetings shall be
general meetings, and any business may be transacted thereat.
Section 4. Special Meetings.
- ----------------------------
Special meetings of the Board of Directors may be called by
the Chairman of the Board or the President, or by two or more directors, or by a
majority of the members of the executive committee if one be constituted.
Section 5. Quorum; Voting.
- --------------------------
A majority of the Board of Directors shall constitute a quorum
for the transaction of business at every meeting of the Board of Directors; but,
if at any meeting there be less than a quorum present, a majority of those
present may adjourn the meeting from time to time, but not for a period
exceeding ten days at any one time or 60 days in all, without notice other than
by announcement at the meeting, until a quorum shall attend. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally called.
Except as hereinafter provided or as otherwise provided by the Charter or by
law, directors shall act by a vote of a majority of those members in attendance
at a meeting at which a quorum is present.
Section 6. Notice of Meetings.
- ------------------------------
Except as provided in Section 3 of this Article, notice of the
time and place of every regular and special meeting of the Board of Directors
shall be given to each director in the manner provided in Section 2 of Article
IX hereof. Subsequent to each Board meeting, and as soon as practicable
thereafter, each director shall be furnished with a copy of the minutes of said
meeting. At least 24 hours notice shall be given at all meetings. The purpose of
any meeting of the Board of Directors need not be stated in the notice.
Section 7. Vacancies.
- ---------------------
(a) If the office of a director becomes vacant for any reason,
including increase in the size of the Board, such vacancy may be filled by the
Board by a vote of a majority of directors then in office, although such
majority is less than a quorum. If the Corporation seeks to remain qualified as
a real estate investment trust, then any replacement for an Independent Director
shall be nominated by a majority of any Independent Directors remaining on the
Board.
(b) If the vacancy occurs as a result of the removal of a
director by the stockholders, the stockholders may elect a successor at the
meeting at which the removal occurs. Failing such election, the vacancy may be
filed by the Board in the manner and by the vote provided for in subsection (a)
above.
(c) If the entire Board of Directors shall become vacant, any
stockholder may call a special meeting in the same manner that the Chairman of
the Board or the President may call such meeting, and directors for the
unexpired term may be elected at such special meeting in the manner provided for
their election at annual meetings.
(d) A director appointed or elected to fill a vacancy shall
serve until the next annual meeting of stockholders and until a successor is
elected and qualifies.
Section 8. Rules and Regulations.
- ---------------------------------
The Board of Directors may adopt such rules and regulations
for the conduct of its meetings and the management of the affairs of the
Corporation as it may deem proper and not inconsistent with the laws of the
State of Maryland or these Bylaws or the Charter.
Section 9. Committees.
- ----------------------
The Board of Directors may appoint from among its members an
executive committee, an audit committee and other committees composed of three
or more directors. A majority of the members of any committee so appointed shall
be Independent Directors if the Corporation seeks to remain qualified as a real
estate investment trust, or to the extent required by applicable rules or
policies of any securities exchange or other similar facility. The Board of
Directors may delegate to any committee any of the powers of the Board of
Directors except those powers specifically denied by law. However, if the Board
of Directors has given general authorization for the issuance of stock, a
committee of the board, in accordance with a general formula or method specified
by the Board of Directors by resolution or by adoption of a stock option plan,
may fix the terms of stock subject to classification or reclassification and the
terms on which any stock may be issued.
Notice of committee meetings shall be given in the same manner
as notice for special meetings of the Board of Directors.
One-third (1/3), but not less than two (2), of the members of
any committee shall be present in person at any meeting of such committee in
order to constitute a quorum for the transaction of business at such meeting,
and the act of a majority present shall be the act of such committee. The Board
of Directors may designate a chairman of any committee and such chairman or any
two members of any committee may fix the time and place of its meetings unless
the Board shall otherwise provide. In the absence or disqualification of any
member of any such committee, the members thereof present at any meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another director to act at the meeting in the place of such
absent or disqualified members; provided, however, that in the event of the
absence or disqualification of an Independent Director, such appointee shall be
an Independent Director.
Each committee shall keep minutes of its proceedings and shall
report the same to the Board of Directors at the meeting next succeeding, and
any action by the committees shall be subject to revision and alteration by the
Board of Directors, provided that no rights of third persons shall be affected
by any such revision or alteration. Action of a committee without a meeting may
be taken by unanimous written consent signed by all members of the committee.
Subject to the provisions hereof, the Board of Directors shall
have the power at any time to change the membership of any committee, to fill
all vacancies, to designate alternate members to replace any absent or
disqualified member, or to dissolve any such committee.
Section 10. Compensation.
- -------------------------
The directors may receive a stated salary for their services,
and/or a fixed sum and expenses of attendance may be allowed for attendance at
each regular or special meeting. The stated salary and attendance fee, if any,
shall be determined by resolution of the Board; provided, however, that nothing
herein contained shall be construed as precluding a director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 11. Place of Meetings.
- ------------------------------
Regular or special meetings of the Board may be held within or
without the State of Maryland, as the Board may from time to time determine. The
time and place of meeting may be fixed by the party making the call.
Section 12. Informal Action by the Directors.
- ---------------------------------------------
Any action required or permitted to be taken at any meeting of
the Board may be taken without a meeting, if a written consent to such action is
signed by all members of the Board and such consent is filed with the minutes of
the Board.
Section 13. Telephone Conference.
- ---------------------------------
Members of the Board of Directors or any committee thereof may
participate in a meeting of the Board or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at the meeting.
ARTICLE III.
-----------
Officers
--------
Section 1. In General.
- ----------------------
The Board of Directors may choose a Chairman of the Board from
among the directors. The Board of Directors shall elect a President, one or more
Vice Presidents, a Treasurer, a Secretary, and such Assistant Secretaries and
Assistant Treasurers as the Board may from time to time deem appropriate. All
officers shall hold office only during the pleasure of the Board or until their
successors are chosen and qualify. Any two of the above offices, except those of
President and Vice President, may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument in more than one capacity
when such instrument is required to be executed, acknowledged or verified by any
two or more officers. The Board of Directors may from time to time appoint such
other agents and employees with such powers and duties as the Board may deem
proper. In its discretion, the Board of Directors may leave unfilled any offices
except those of President, Treasurer and Secretary.
Section 2. Chairman of the Board.
- ---------------------------------
The Chairman of the Board, if one is elected, shall have the
responsibility for the implementation of the policies determined by the Board of
Directors and for the administration of the business affairs of the Corporation.
The Chairman of the Board shall, if present, preside over the meetings of the
Board and of the stockholders and shall be the Chief Executive Officer of the
Corporation if so designated by resolution of the Board.
Section 3. President.
- ---------------------
The President shall have the responsibility for the active
management of the business and general supervision and direction of all of the
affairs of the Corporation. In the absence of a Chairman of the Board the
President shall preside over the meetings of the Board and of the stockholders,
if present at the meeting, and shall perform such other duties as may be
assigned by the Board of Directors or the Executive Committee. The President
shall have the authority on the Corporation's behalf to endorse securities owned
by the Corporation and to execute any documents requiring the signature of an
executive officer. The President shall perform such other duties as the Board of
Directors may direct, and shall be the Chief Executive Officer of the
Corporation unless the Chairman of the Board is so designated by resolution of
the Board.
Section 4. Vice Presidents.
- ---------------------------
The Vice Presidents, in the order of priority designated by
the Board of Directors, shall be vested with all the power and may perform all
the duties of the President in the latter's absence. They may perform such other
duties as may be prescribed by the Board of Directors or the Executive Committee
or the President.
Section 5. Treasurer.
- ---------------------
The Treasurer shall have general supervision over the finances
of the Corporation and shall perform such other duties as may be assigned by the
Board of Directors or the President. If required by resolution of the Board, the
Treasurer shall furnish bond (which may be a blanket bond) with such surety and
in such penalty for the faithful performance of duty as the Board of Directors
may from time to time require, the cost of such bond to be defrayed by the
Corporation.
Section 6. Secretary.
- ---------------------
The Secretary shall keep the minutes of the meetings of the
stockholders and of the Board of Directors and shall attend to the giving and
serving of all notices of the Corporation required by law or these Bylaws. The
Secretary shall maintain at all times in the principal office of the Corporation
at least one copy of the Bylaws with all amendments to date, and shall make the
same, together with the minutes of the meetings of the stockholders, the annual
statement of affairs of the Corporation and any voting trust or other
stockholders agreement on file at the office of the Corporation, available for
inspection by any officer, director or stockholder during reasonable business
hours. The Secretary shall perform such other duties as may be assigned by the
Board of Directors.
Section 7. Assistant Treasurer and Secretary.
- ---------------------------------------------
The Board of Directors may designate from time to time
Assistant Treasurers and Secretaries, who shall perform such duties as may from
time to time be assigned to them by the Board of Directors or the President.
Section 8. Compensation; Removal; Vacancies.
- --------------------------------------------
The Board of Directors shall have power to fix the
compensation of all officers of the Corporation. It may authorize any committee
or officer, upon whom the power of appointing subordinate officers may have been
conferred, to fix the compensation of such subordinate officers. The Board of
Directors shall have the power at any regular or special meeting to remove any
officer, if in the judgment of the Board the best interests of the Corporation
will be served by such removal. The Board of Directors may authorize any officer
to remove subordinate officers. The Board of Directors may authorize the
Corporation's employment of an officer for a period in excess of the term of the
Board. The Board of Directors at any regular or special meeting shall have power
to fill a vacancy occurring in any office for the unexpired portion of the term.
Section 9. Substitutes.
- -----------------------
The Board of Directors may from time to time in the absence of
any one of its officers or at any other time, designate any other person or
persons, on behalf of the Corporation to sign any contracts, deeds, notes or
other instruments in the place or stead of any of such officers, and may
designate any person to fill any one of said offices, temporarily or for any
particular purpose; and any instruments so signed in accordance with a
resolution of the Board shall be the valid act of the Corporation as fully as if
executed by any regular officer.
ARTICLE IV.
----------
Resignation
-----------
Any director or officer may resign from office at any time.
Such resignation shall be made in writing and shall take effect from the time of
its receipt by the Corporation, unless some time be fixed in the resignation,
and then from that date. The acceptance of a resignation shall not be required
to make it effective.
ARTICLE V.
---------
Commercial Paper, Etc.
---------------------
All bills, notes, checks, drafts and commercial paper of all
kinds to be executed by the Corporation as maker, acceptor, endorser or
otherwise, and all assignments and transfers of stock, contracts, or written
obligations of the Corporation, and all negotiable instruments, shall be made in
the name of the Corporation and shall be signed by any one or more of the
following officers as the Board of Directors may from time to time designate,
i.e. the Chairman of the Board, the President, any Vice President, or the
Treasurer, or by such other person or persons as the Board of Directors or
Executive Committee may from time to time designate.
ARTICLE VI.
----------
Fiscal Year
-----------
The fiscal year of the Corporation shall cover such period of
12 months as the Board of Directors may determine. In the absence of any such
determination, the accounts of the Corporation shall be kept on a calendar year
basis.
ARTICLE VII.
-----------
Seal
----
The seal of the Corporation shall be in the form of two
concentric circles inscribed with the name of the Corporation and the year and
State in which it is incorporated. The Secretary or Treasurer, or any Assistant
Secretary or Assistant Treasurer, shall have the right and power to attest to
the corporate seal.
In lieu of affixing the corporate seal to any document, it shall be sufficient
to meet the requirements of any law, rule or regulation relating to a corporate
seal to affix the word "(SEAL)" adjacent to the signature of the person
authorized to sign the document on behalf of the Corporation.
ARTICLE VIII.
------------
Stock
-----
Section 1. Issue.
- -----------------
Each stockholder shall be entitled to a certificate or
certificates which shall represent and certify the number and class of shares of
stock owned in the Corporation. Each certificate shall be signed by the Chairman
of the Board, the President or any Vice President, and countersigned by the
Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer, and sealed with the seal of the Corporation. The signatures of the
Corporation's officers and its corporate seal appearing on stock certificates
may be facsimiles if each such certificate is authenticated by the manual
signature of an officer of a duly authorized transfer agent. Stock certificates
shall be in such form not inconsistent with law or with the Charter, as shall be
approved by the Board of Directors. In case any officer of the Corporation who
has signed any certificate ceases to be an officer of the Corporation, whether
by reason of death, resignation or otherwise, before such certificate is issued,
then the certificate may nevertheless be issued by the Corporation with the same
effect as if the officer had not ceased to be such officer as of the date of
such issuance.
Section 2. Transfers.
- ---------------------
]
The Board of Directors shall have power and authority to make
all such rules and regulations as the Board may deem expedient concerning the
issue, transfer and registration of stock certificates. The Board of Directors
may appoint one or more transfer agents and/or registrars for its outstanding
stock, and their duties may be combined. No transfer of stock shall be
recognized or binding upon the Corporation until recorded on the books of the
Corporation, or, as the case may be, of its transfer agent and/or of its
registrar, upon surrender and cancellation of a certificate or certificates for
a like number of shares.
Section 3. Record Dates for Dividends and Stockholders' Meeting.
- ----------------------------------------------------------------
The Board of Directors may fix a date not exceeding 90 days
preceding the date of any meeting of stockholders, any dividend payment date or
any date for the allotment of rights, as a record date for the determination of
the stockholders entitled to notice of and to vote at such meeting, or entitled
to receive such dividends or rights, as the case may be, and only stockholders
of record on such date shall be entitled to notice of and to vote at such
meeting or to receive such dividends or rights, as the case may be. In the case
of a meeting of stockholders, the record date shall be not less than ten days
prior to the date of the meeting.
Section 4. New Certificates.
- ----------------------------
In case any certificate of stock is lost, stolen, mutilated or
destroyed, the Board of Directors may authorize the issue of a new certificate
in place thereof upon indemnity to the Corporation against loss and upon such
other terms and conditions as it may deem advisable. The Board of Directors may
delegate such power to any officer or officers of the Corporation or to any
transfer agent or registrar of the Corporation; but the Board of Directors, such
officer or officers or such transfer agent or registrar may, in their
discretion, refuse to issue such new certificate save upon the order of some
court having jurisdiction in the premises.
ARTICLE IX.
----------
Notice
------
Section 1. Notice to Stockholders.
- ----------------------------------
Whenever by law or these Bylaws notice is required to be given
to any stockholder, such notice shall be in writing and may be given to each
stockholder by leaving the same at his or her residence or usual place of
business, or by mailing it, postage prepaid, and addressed to such stockholder's
address as it appears on the books of the Corporation or its transfer agent.
Such leaving or mailing of notice shall be deemed the time of giving such
notice.
Section 2. Notice to Directors and Officers.
- --------------------------------------------
Whenever by law or these Bylaws notice is required to be given
to any director or officer, such notice may be given in any one of the following
ways: by personal notice to such director or officer, by telephone communication
with such director or officer personally, by telecopy, by telegram, cablegram or
radiogram, or by leaving the notice at his residence or usual place of business,
or by mail. The time when such notice shall be consigned to a communication
company for delivery shall be deemed to be the time of the giving of such
notice, and four days after the time when such notice shall be mailed shall be
deemed to be the time of the giving of such notice by mail.
Section 3. Waiver of Notice.
- ----------------------------
Notice to any stockholder or director of the time, place
and/or purpose of any meeting of stockholders or directors required by these
Bylaws may be dispensed with if such stockholder shall either attend in person
or by proxy, or if such director shall attend in person, or if such absent
stockholder or director shall, in writing filed with the records of the meeting
either before or after the holding thereof, waive such notice.
ARTICLE X.
---------
Voting of Stock in Other Corporations
-------------------------------------
Any stock in other corporations, which may from time to time
be held by the Corporation, may be represented and voted at any meeting of
stockholders of such other corporations by the President or a Vice-President or
by proxy or proxies appointed by the President or a Vice-President, or otherwise
pursuant to authorization thereunto given by a resolution of the Board of
Directors adopted by a vote of a majority of the directors.
ARTICLE XI.
----------
Indemnification
---------------
Section 1. Directors and Officers, Third Party Actions.
- -------------------------------------------------------
The Corporation shall indemnify any director or officer of the
Corporation who was or is a party or is threatened to be made a party to any
threatened, pending or completed actions, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was serving as an
authorized representative of the Corporation (which, for the purposes of this
Article, shall mean service, at the Corporation's request, as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or employee benefit plan)
against judgments, fines, amounts paid in settlement and expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with such
action, suit or proceeding unless it is proved that the act or omission of the
director was material to the cause of action adjudicated in the proceeding and:
(a) was committed in bad faith; or (b) was the result of active and deliberate
dishonesty; or (c) the director actually received an improper personal benefit
in money, property or services, or, with respect to any criminal action or
proceeding, the director had reasonable cause to believe his act or omission was
unlawful. The termination of any action, suit or proceeding by judgment, order
or settlement shall not create a presumption that, with respect to any criminal
action or proceeding, the director had reasonable cause to believe that his act
or omission was unlawful. The termination of any action, suit or proceeding by
conviction, or a plea of nolo contendere or its equivalent, or an entry of an
order of probation prior to judgment, creates a rebuttable presumption that the
director did not meet that standard of conduct set forth in the immediately
preceding sentence.
Section 2. Directors and Officers, Actions by or in the Right of the
- --------------------------------------------------------------------
Corporation.
- -----------
The Corporation shall indemnify any director or officer of the
Corporation who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was an authorized representative of the Corporation, to the same extent set
forth in Section 1 of this Article, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation, unless and only to the extent that a
Court of appropriate jurisdiction determines upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity.
Section 3. Indemnification for Successful Defenses.
- ---------------------------------------------------
To the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding of the type referred to in Section 1 or 2 of this
Article or in defense of any claim, issue or matter therein, he shall be
indemnified by the Corporation against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith. Such a person
who is not a director or officer of the Corporation may, at the discretion of
the Corporation, be indemnified by the Corporation in any other circumstances to
any extent if the Corporation would be required by Section 1 or 2 of this
Article to indemnify such person in such circumstances to such extent if he were
or had been a director or officer of the Corporation.
Section 4. Procedure.
- ---------------------
Indemnification under Section 1 or 2 of this Article may be
made in a specific case upon a determination that indemnification of the
authorized representative is required or proper in the circumstances because he
has met the applicable standard of conduct set forth in Sections 1 or 2 of this
Article. Such determination shall be made:
(a) By the Board of Directors by a majority vote of a
quorum consisting of directors not, at the time, parties to the action, suit or
proceeding ("disinterested directors"), or if such a quorum cannot be obtained,
then by a majority vote of a committee of the Board consisting solely of two or
more disinterested directors designated to act in the matter by a majority vote
of the full Board (which may include directors who are parties to the action,
suit or proceeding); or
(b) By special legal counsel selected by the Board of
Directors or a committee of the Board by vote as set forth in (a) above, or if
the requisite quorum of the full Board cannot be obtained and the committee
cannot be established, by a majority vote of the full Board (which may include
directors who are parties to the action, suit or proceeding); or
(c) By the stockholders.
Section 5. Advancing Expenses.
- ------------------------------
Expenses (including attorneys' fees) incurred by a director or
officer of the Corporation in connection with any civil or criminal action, suit
or proceeding of the type referred to in Section 1 or 2 of this Article shall be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding, upon receipt of (i) a written affirmation by the director or
officer of his good faith belief that the standard of conduct necessary for
indemnification by the Corporation as required by Section 1 of this Article or
by law; and (ii) a written undertaking by or on behalf of a director or officer
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as required in this Article or
authorized by law. Such expenses incurred by an employee or agent who is not a
director or officer of the Corporation may be paid by the Corporation in advance
when authorized by the Board of Directors upon receipt of a similar undertaking.
The repayment obligation represented by an undertaking pursuant to this Section
need not be secured and may be accepted without reference to financial ability
to make the repayment.
Section 6. Scope of Article.
- ----------------------------
Each person who shall act as an authorized representative of
the Corporation shall be deemed to be doing so in reliance upon such rights of
indemnification as are provided in this Article.
The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any agreement, vote of stockholders or disinterested
directors, statute or otherwise, both as to action in his official capacity and
as to action in another capacity while holding such office or position, and
shall continue as to a person who has ceased to be an authorized representative
of the Corporation and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE XII.
-----------
Amendments
----------
These bylaws may be amended or replaced, or new bylaws may be
adopted, either (a) by the vote of the stockholders entitled to cast at least a
majority of the votes which all stockholders are entitled to cast thereon at any
duly organized annual or special meeting of stockholders; or (b) with respect to
those matters which are not by statute reserved exclusively to the stockholders,
by vote of a majority of the Board of Directors of the Corporation in office at
any regular or special meeting of directors. It shall not be necessary to set
forth such proposed amendment, repeal or new bylaws, or a summary thereof, in
any notice of such meeting, whether annual, regular or special.
<PAGE>
CERTIFICATION
I hereby certify that the foregoing Bylaws were adopted by the
Board of Directors of the Corporation at a meeting called for that purpose as of
the 30th Day of June 1995.
\Jay R. Hoffman
-----------------------
JAY R. HOFFMAN
Secretary
LOAN AGREEMENT
BANK: BANK ONE, ARIZONA, NA, a national banking association
Mailing Address of Bank:
Real Estate Finance Division
Post Office Box 29542
Phoenix, Arizona 85038
Attention: Dept. A-383
BORROWER: HOMEPLEX MORTGAGE INVESTMENTS CORPORATION, a Maryland corporation
Mailing Address of Borrower:
5333 North 7th Street
Suite 219
Phoenix, Arizona 85014-2803
DATE: May 5, 1995
Background
----------
A. Borrower has applied to Bank for a revolving line of credit of
$5,000,000.00 to finance the making of Mortgage Loans (as hereinafter defined)
originated by Borrower. Bank is willing to make Advances as described herein,
upon and subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto hereby agree as follows:
I. DEFINITIONS.
1.1 Defined Terms. Capitalized terms defined below or
elsewhere in this Agreement (including the Exhibits hereto) shall have the
following meanings (defined terms may be used in the singular or the plural, as
the context requires):
"A&D Loan" means an Eligible Mortgage Loan which provides for
the advancing of funds by Borrower for purposes of reimbursing the
obligor thereunder the cost of acquiring real property and the cost of
constructing and developing offsite or other improvements thereon.
"Acquisition Advances" means the portion of the Maximum
Allowed Advances with respect to an A&D Loan that relate to the cost of
acquiring real property, as designated on the Term Sheet for such A&D
Loan.
"Acquisition Loan" means an Eligible Mortgage Loan which
provides for the advancing of funds by Borrower for purposes of
reimbursing the obligor thereunder the cost of acquiring real property.
"Advance" means a disbursement by Bank under the Commitment,
including readvances of funds previously advanced to Borrower and
repaid to Bank.
"Advance Rate" has the meaning set forth in Section 2.1(c).
"Advance Request" means a request for Advance in such form as
Bank may require from time to time.
"Agreement" means this Loan Agreement, either as originally
executed or as it may from time to time be supplemented, modified or
amended.
"Bank" means Bank One, Arizona, NA, a national banking
association.
"Borrower" means Homeplex Mortgage Investments Corporation, a
Maryland corporation.
"Business Day" means any day excluding Saturday, Sunday and
any day on which national banks are authorized or required to be
closed.
"Collateral" means all of the Mortgages, Mortgage Loans, and
other collateral pledged by Borrower to Bank from time to time as
security for the repayment of the Note.
"Collateral Documents" means the documents and instruments
required to be delivered by Borrower pursuant to Section 2.2(a)(v).
"Commitment" has the meaning set forth in Section 2.1(a).
"Commitment Fee" has the meaning set forth in Section
2.4(e)(i).
"Default Rate" has the meaning set forth in Section 2.4(d).
"Development Advances" means the portion of the Maximum
Allowed Advances with respect to an A&D Loan that relate to the cost of
constructing and developing offsite or other improvements on the real
property, as designated on the Term Sheet for such A&D Loan.
"Effective Date" means the date upon which (i) this Agreement
has been duly executed and delivered by Borrower and (ii) all
conditions precedent to the effectiveness hereof pursuant to Article IV
have been satisfied.
"Eligible Mortgage Loan" means a Mortgage Loan which (i) is
secured by a Mortgage constituting a first lien on commercial or
residential real property located in Arizona, (ii) is either an
Acquisition Loan or an A&D Loan, (iii) is not a revolving loan, (iv)
has been approved by Bank in its sole and absolute discretion, and (v)
otherwise complies with the terms and conditions of this Agreement.
"Event of Default" means any of the conditions or events set
forth in Section 7.1 hereof.
"Funding Date" means with respect to each Advance against a
specific Eligible Mortgage Loan, the date of the making of such
Advance.
"GAAP" means generally accepted accounting principles
consistently applied.
"Improvements" has the meaning set forth in Section
2.2(a)(vi)(20).
"Indemnified Liabilities" has the meaning set forth in Article
IX.
"Late Fee" has the meaning set forth in Section 2.4(c).
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
"Loan" means the loans and Advances from time to time made by
Bank to Borrower pursuant to this Agreement.
"Loan Documents" shall mean this Agreement, the Note, the
Security Agreements, and all other documents and instruments executed
and delivered in connection with the Loan.
"Maturity Date" means April 30, 1996.
"Maximum Allowed Advances" means the total Advances approved
by Bank with respect to each Eligible Mortgage Loan, as set forth on
the Term Sheet for such Eligible Mortgage Loan. The Maximum Allowed
Advances with respect to each Eligible Mortgage Loan that is an A&D
Loan will be separately allocated on the Term Sheet as Acquisition
Advances and Development Advances.
"Mortgage" means a mortgage or deed of trust on improved real
property.
"Mortgage Loan" means any loan evidenced by a Mortgage Note
and secured by a Mortgage.
"Mortgage Note" means a note secured by a Mortgage.
"Note" has the meaning set forth in Section 2.3.
"Notices" has the meaning set forth in Article VIII.
"Obligations" has the meaning set forth in Section 3.1.
"Officer's Certificate" means a certificate executed on behalf
of Borrower by the chief financial officer or such other officer of
Borrower approved by Bank.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether
or not legal entities, and governments and agencies and political
subdivisions thereof.
"Pledged Mortgages" means all promissory notes and mortgages
or deeds of trust or security deeds and other documents and instruments
evidencing or securing the Eligible Mortgage Loans with respect to
which Bank has made an Advance hereunder.
"Prime Rate" means the rate of interest established and
publicly announced from time to time by Bank One, Arizona, NA or its
successors, as its "Prime Rate" or "Reference Rate", whether or not
such rate actually is the lowest rate available to commercial borrowers
or other customers of such bank.
"Security Agreements" means the Security Agreements executed
and delivered by Borrower to Bank pursuant to Section 2.2(a)(v)(5), as
amended, modified, supplemented, renewed and restated from time to
time.
"Term Sheet" means a term sheet in the form attached as
Exhibit A.
"Unmatured Event of Default" means the occurrence of any event
or existence of any condition which, but for the giving of notice, the
lapse of time, or both, would constitute an Event of Default.
II. THE CREDIT.
2.1 The Commitment.
(a) Agreement of Bank. Subject to the terms and
conditions of this Agreement, Bank agrees, from time to time from and after the
Effective Date, to make Advances to Borrower, so long as the total aggregate
principal amount outstanding at any one time of all Advances plus the total
aggregate principal amount committed but undisbursed under this Agreement shall
not exceed $5,000,000.00 (the "Commitment"). Within the Commitment, Borrower may
borrow, repay and reborrow.
(b) Use of Advances; Request for Advances. Advances
shall be made to Borrower solely for the purpose of reimbursing Borrower for the
origination by Borrower of Eligible Mortgage Loans and can be used by Borrower
for any corporate purpose. Advances shall be made at the request of Borrower, in
the manner hereinafter provided in Section 2.2 hereof, against the pledge of
such Eligible Mortgage Loans as Collateral therefor.
(c) Determination of Maximum Allowed Advances. The
Maximum Allowed Advances for each Eligible Mortgage Loan will be determined in
accordance with the Advance Rate for such Eligible Mortgage Loan, as set forth
on the Term Sheet for such Eligible Mortgage Loan. The Advance Rate, for
purposes of this Agreement, means the ratio of the Maximum Allowed Advances to
the outstanding principal amount of the Eligible Mortgage Loan. The Advance Rate
will not be less than forty percent (40%), and will not exceed sixty percent
(60%), of the outstanding principal amount of the Eligible Mortgage Loan, unless
otherwise determined by Bank in its sole and absolute discretion.
2.2 Conditions Precedent to Advances and Procedure for
Obtaining Advances.
(a) Conditions Precedent. The obligation of Bank to
make any Advances is subject to the satisfaction, in the sole discretion of
Bank, on or before each Funding Date, of the following conditions precedent:
(i) Effective Date. All of the conditions
precedent set forth in Section 4.1 shall have been satisfied and the Effective
Date shall have occurred.
(ii) No Defaults. No Default or Event of Default
shall have occurred and be continuing.
(iii) Accuracy of Representations and Warranties.
All representations and warranties made herein or in any other Loan Document
shall be true and correct as of the date of each such Advance as if made on and
as of such date.
(iv) Advance Request. Borrower shall have
executed and delivered to Bank a properly completed Advance Request.
(v) Collateral Documents. Borrower shall have
executed and delivered to Bank the following documents (the "Collateral
Documents") with respect to the Mortgage Loan that is the subject of the Advance
Request, all of which shall be acceptable to Bank in its sole and absolute
discretion; provided, however, that at the request of Bank, the documents listed
in items (1) through (5) shall be delivered to the collection agent for the
Mortgage Loan, as agent for Bank, and Borrower shall deliver to Bank copies
thereof, certified by the collection agent as being true and correct and as
being held in the possession of the collection agent as agent for Bank:
(1) Mortgage Note. The original Mortgage Note
evidencing the indebtedness secured by the applicable Eligible Mortgage
Loan, duly executed by the mortgagor to Borrower as payee.
(2) Endorsement. An endorsement by Borrower
of the Mortgage Note, duly executed by Borrower, endorsed to Bank as
follows:
PAY TO THE ORDER OF BANK ONE, ARIZONA, NA, a national banking
association, WITH RECOURSE.
(3) Mortgage. The original recorded Mortgage
securing the Mortgage Note. The Mortgage must accurately describe the
Mortgage Note which it is intended to secure.
(4) Loan Documents. All other originally
executed documents and instruments relating to the Mortgage.
(5) Collection Instructions. The originally
executed collection instructions relating to the Mortgage.
(6) Assignment. A duly executed assignment to
Bank of the Mortgage in the form set forth on Exhibit B. This instrument
must accurately describe the Mortgage which it is intended to assign,
and be otherwise satisfactory to Bank.
(7) Security Agreement. A duly executed
Security Agreement relating to the Mortgage, the indebtedness secured
thereby, and all documents and rights related to the applicable Mortgage
Loan, in the form set forth on Exhibit C. This instrument must
accurately describe the Mortgage and related documents and interests
which it is intended to assign, and be otherwise satisfactory to Bank.
(8) Financing Statements. Duly executed
Financing Statements in the form set forth on Exhibit D relating to the
Mortgage and the indebtedness secured thereby. These instruments must
accurately described the Mortgage and related documents and instruments,
and be otherwise satisfactory to Bank.
(9) Bank Account. If an interest reserve
account or other pledged bank account has been provided as additional
security for the Mortgage Note, duly executed signature cards, pledge
agreements, and any other documents and instruments executed by such
obligor, Borrower and the depository for such account as Bank may
require in order to assign Borrower's interest thereunder to Bank.
(10) Other Documents. Such other documents
and instruments as Bank may reasonably request.
(vi) Additional Documents. Borrower, at its
expense, shall have obtained and delivered to Bank the documents listed on
Exhibit E (except that the appraisal required by Paragraph 2 shall be ordered by
Bank at Borrower's expense), all of which shall be in form and content
satisfactory to Bank and shall be subject to approval in writing by Bank.
(vii) Fee. Bank shall have received the
Commitment Fee relating to such Advance.
(b) Timing of Advance. So long as all conditions
precedent to an Advance have been satisfied, Bank will make the Advance within
one (l) Business Day thereafter.
(c) Single Advance. Upon satisfaction of the
conditions set forth in Section 2.2(a), Bank will make a single Advance with
respect to each Eligible Mortgage Loan that is not an A&D Loan. With respect to
each A&D Loan, (i) upon satisfaction of the conditions set forth in Section
2.2(a), Bank will initially make a single Advance in the amount of the
Acquisition Advances for such A&D Loan, and (ii) upon satisfaction of the
conditions set forth in Section 2.2(a) and upon Bank's receipt and approval of
the following documents, Bank will make a second Advance in the amount of the
Development Advances for such A&D Loan:
(i) Evidence satisfactory to Bank that the
Improvements have been completed in accordance with the plans and specifications
therefor.
(ii) Paid invoices and full unconditional lien
waivers for all labor and materials relating to the construction of the
Improvements.
(iii) An affidavit of payment of debts and claims
executed by the general contractor.
(iv) Evidence that any inspection required by any
state, city or other governmental authority has been completed with results
satisfactory to Bank.
(v) The ALTA "as-built" survey, as described in
Paragraph 17 of Exhibit E.
(d) Single Indebtedness. All Advances under this
Agreement shall constitute a single indebtedness and all of the Collateral shall
be security for the Note and for the performance of all obligations of Borrower
to Bank.
2.3 Note. Borrower's obligation to pay the principal of, and
interest on, all Advances made by Bank shall be evidenced by the promissory note
(the "Note") dated as of the date. The term "Note" shall include all extensions,
renewals and modifications of the Note and all substitutions or replacements
therefor. All terms and provisions of the Note are incorporated herein.
2.4 Interest.
(a) Interest Rate. Subject to the provisions in the
Note, the unpaid amount of each Advance shall bear interest from and including
the applicable Funding Date until paid in full, at a floating rate of interest
(computed on the basis of a 360-day year and applied to the actual number of
days elapsed) which is equal to the sum of the Prime Rate plus one-half of one
percent (.5%) per annum. The floating rate of interest will be adjusted as of
the effective date of each change in the Prime Rate.
(b) Interest Payments. Interest shall be payable
monthly in arrears, on the first (1st) day of each month, commencing with the
first day of the first month following the date hereof, and on the Maturity
Date.
(c) Late Fee. Subject to the provisions in the Note,
Borrower shall pay to Bank a late fee ("Late Fee") of four percent (4%) of the
amount of any interest payment past due in excess of fifteen (15) days.
(d) Default Rate. Subject to the provisions in the
Note, upon and after an Event of Default hereunder, at the option of Bank, the
outstanding principal amount of all Advances shall bear interest, payable on
demand, at a rate per annum equal to the sum of the floating rate described in
Section 2.4(a) plus four percent (4%) (the "Default Rate"). The application of
the Default Rate shall not be interpreted or deemed to extend any cure period
set forth in this Agreement or otherwise to limit any of Bank's remedies under
this Agreement.
(e) Fees and Expenses. In addition to all interest
and other fees payable pursuant to the Loan Documents and this Agreement,
Borrower agrees to pay:
(i) Commitment Fee. A Commitment Fee of one-half
of one percent (.5%) of the Maximum Allowed Advances for each Eligible Mortgage
Loan, payable upon execution of the Term Sheet for such Eligible Mortgage Loan.
(ii) Other Fees. All fees and expenses described
in Article IX.
2.5 Principal Payments.
(a) Maturity Date. The outstanding principal amount
of all Advances and all other amounts outstanding hereunder shall be payable in
full on the Maturity Date or upon the earlier expiration or termination of the
Commitment.
(b) Prepayment. Borrower shall have the right to
prepay the outstanding Advances in whole or in part, from time to time, without
premium or penalty.
(c) Other Mandatory Principal Payments. In addition,
Borrower shall be obligated to pay to Bank, without the necessity of prior
demand or notice from Bank, the amount of any outstanding Advance against a
specific Eligible Mortgage Loan as shown on Bank's records, upon the occurrence
of any of the following events:
(i) Ineligible Mortgage Loans. Any Mortgage Loan
with respect to which Bank has made an Advance ceases to comply with the
provisions of this Agreement;
(ii) Inaccuracy of Representations and
Warranties. If any of the representations and warranties set forth in Sections
5.6, 6.7 or 3.14(c) or (d) with respect to an Eligible Mortgage Loan are untrue
or incorrect in any material respect, or if any of the representations and
warranties set forth in Sections 5.12 or 6.14(a) or (b) with respect to an
Eligible Mortgage Loan remain untrue or incorrect in any material respect for a
period of five (5) Business Days after notice thereof to Borrower;
(iii) Commitment Exceeded. If the aggregate
amount of all Advances plus the aggregate principal amount committed but
undisbursed under this Agreement exceeds the available Commitment; or
(iv) Defaults. Such Eligible Mortgage Loan is
defaulted and remains in default after expiration of any applicable cure periods
for sixty (60) days.
III. COLLATERAL.
3.1 Collection Agent. Borrower will cause all Pledged
Mortgages to be serviced by a collection agent approved by Bank. All original
Mortgage Notes in connection with Pledged Mortgages shall be held by the
collection agent as agent for Bank.
3.2 Payments by Obligor.
(a) Principal Payments. All principal amounts paid by
the obligor under the Pledged Mortgages shall be paid directly to the collection
agent, and the collection agent shall promptly remit all such amounts directly
to Bank, after first deducting the collection agent's reasonable and customary
costs of collection, as approved by Bank. So long as no Event of Default or
Unmatured Event of Default has occurred and is continuing, Bank will retain a
portion of such amounts received by Bank from the collection agent with respect
to a Pledged Mortgage (not to exceed the outstanding indebtedness under the
Note), and shall remit the balance of such amounts to Borrower. The amount
retained by Bank shall be calculated as follows:
Amount received by Bank from collection agent multiplied by the Advance
Rate for the applicable Pledged Mortgage equals the amounts retained by
Bank.
If an Event of Default or Unmatured Event of Default has occurred and is
continuing, Bank will have no obligation to remit any portion of such amounts to
Borrower. Any amounts paid by collection agent to Bank, and retained by Bank,
under this paragraph shall be applied against the outstanding indebtedness under
the Note, in the manner set forth in the Note.
(b) Interest Payments. So long as no Event of Default
or Unmatured Event of Default has occurred and is continuing, all interest paid
by the obligor under the Pledged Mortgages (including any payments disbursed
from an interest reserve account or other pledged account) shall be remitted and
disbursed directly to Borrower. If an Event of Default or Unmatured Event of
Default has occurred and is continuing, all such interest shall be paid directly
to Bank (or to the collection agent, who shall promptly remit all such amounts
directly to Bank), and Bank will have no obligation to remit any portion of such
amounts to Borrower. Any amounts so retained by Bank under this paragraph shall
be applied against the outstanding indebtedness under the Note, in the manner
set forth in the Note.
3.3 Release of Collateral. Provided no Event of Default has
occurred and is continuing, Bank will release a Pledged Mortgage from the pledge
created hereby, upon receipt by Bank of the amount advanced by Bank under this
Agreement with respect to such Pledged Mortgage as shown on Bank's records. Upon
payment to Bank of the applicable release price set forth in the documents
related to the Pledged Mortgage and performance by the obligor of any other
conditions for release, and upon request of Borrower, Bank will execute and
deliver to Borrower (without recourse, representation or warranty) deeds of
partial release and reconveyance, releasing from the Pledged Mortgage and
reconveyance to "the person legally entitled thereto" portions of the property
encumbered thereby.
3.4 Return of Collateral at End of Commitment. If (i) the
Commitment shall have expired or been terminated and (ii) no Advances, interest
or other amounts evidenced by the Note or due under this Agreement shall be
outstanding and unpaid, Bank shall deliver or release all Collateral in its
possession to Borrower or as directed in writing by Borrower. The receipt by
Borrower of any Collateral released or delivered to Borrower pursuant to any
provision of this Agreement shall be a complete and full acquittance for the
Collateral so returned, and Bank shall thereafter be discharged from any
liability or responsibility therefor.
3.5 No Duty to Protect Collateral. Bank shall have no duty to
Borrower or any other Person as to the collection or protection of Collateral
held hereunder or any income thereon, nor as to the preservation of any rights
pertaining thereto, beyond the reasonable care and confidentiality thereof
during the time the Collateral is in the actual possession of Bank. Such care
and confidentiality as Bank gives to the safekeeping of its own property of like
kind shall constitute reasonable care and confidentiality of Collateral when in
Bank's actual possession; but Bank is not required to make presentment, demand
or protest, or give notice, and need not take action to preserve any rights
against prior parties, obligors, account debtors, or others, in connection with
any obligation or evidence of indebtedness held as Collateral or in connection
with Borrower's obligations. Notwithstanding any provision hereof or of any
other document to the contrary, the transmittal and delivery of any Pledged
Mortgages, Collateral Documents and other documents or instruments shall be at
the sole risk and expense of Borrower and Bank shall not be liable or obligated
in any respect in the event of the loss, damage, or destruction of any
Collateral Documents, Pledged Mortgages and other documents or instruments or
any delay in the transmission or delivery thereof.
3.6 Default Under Mortgage Loan. Borrower shall use best
efforts to cure or caused to be cured any default under any Eligible Mortgage
Loan in accordance with commercially reasonable standards. Borrower will
reasonably promptly take all legal action to cause any defaults to be cured
under any Eligible Mortgage Loan. Bank will reasonably cooperate with Borrower,
at Borrower's expense, in the enforcement of remedies by Borrower under the
Eligible Mortgage Loan.
IV. CONDITIONS PRECEDENT.
4.1 Closing. The obligation of Bank to make Advances and the
other provisions of this Agreement that are binding upon Bank shall become
effective upon the receipt by Bank of the following, all of which must be
satisfactory in form and content to Bank, in its sole discretion:
(a) Note. The Note, duly executed by Borrower;
(b) Articles and Bylaws. Certified copies of articles
of incorporation and bylaws of Borrower, and current certificates of good
standing for Borrower for Arizona and Maryland;
(c) Resolutions. A resolution of the board of
directors of Borrower, certified as of the date thereof by its corporate
secretary or assistant secretary, authorizing the execution, delivery and
performance of this Agreement and the Note, as applicable, and all other
instruments or documents to be delivered by Borrower pursuant to this Agreement;
(d) Incumbency Certificate. A certificate of the
corporate secretary or assistant secretary of Borrower as to the incumbency and
authenticity of the signatures of the officers of such corporation executing
this Agreement and the Note and each Advance Request and all other instruments
or documents to be delivered pursuant hereto (Bank being entitled to rely
thereon until a new such certificate has been furnished to Bank);
(e) Financial Statement. Financial statements of
Borrower for the period which ended on December 31, 1994 (company prepared);
(f) Licenses and Approvals. Evidence satisfactory to
Bank that Borrower has all necessary licenses and approvals to conduct its
business and engage in the activities contemplated hereby;
(g) Opinion of Counsel. An opinion of Borrower's
counsel, from an attorney reasonably satisfactory to Bank; and
(h) Indenture. Evidence satisfactory to Bank that
Borrower has no liability under that Indenture dated December 1, 1992 between
EMIC Finance Corporation and State Street Bank and Trust Company, as Trustee.
V. REPRESENTATIONS.
Borrower hereby represents and warrants to Bank, as of the
date of this Agreement and as of the date of each Advance Request, that:
5.1 Organization and Good Standing. Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
juris- diction of its formation or incorporation, has the full legal power and
authority to own its properties and to carry on its businesses as currently
conducted and is duly qualified as a foreign corporation to do business and is
in good standing in each jurisdiction in which the transaction of its business
makes such qualification necessary.
5.2 Authorization and Enforceability. Borrower has the power
and authority to execute, deliver and perform this Agreement, the Note and all
other documents contemplated hereby or thereby. The execution, delivery and
performance by Borrower of this Agreement, and all other documents contemplated
hereby and the borrowing hereunder and thereunder, have been duly and validly
authorized by all necessary corporate action on the part of Borrower (none of
which actions have been modified or rescinded, and all of which actions are in
full force and effect) and do not and will not conflict with or violate any
provision of law or of the articles of incorporation or bylaws of Borrower,
conflict with or result in a breach of or constitute a default or require any
consent under, or result in the creation of any Lien upon any property or assets
of Borrower, or result in or require the acceleration of any indebtedness of
Borrower pursuant to, any agreement, instrument or indenture to which Borrower
is a party or by which Borrower or its property may be bound or affected. This
Agreement, the Note and all other documents contemplated hereby or thereby
constitute legal, valid, and binding obligations of Borrower, enforceable in
accordance with their respective terms.
5.3 Approvals. The execution and delivery of this Agreement,
the Note, and all other documents contemplated hereby or thereby and the
performance of Borrower's obligations hereunder and thereunder do not require
any license, consent, approval or other action of any state or federal agency or
governmental or regulatory authority.
5.4 Financial Condition. The financial statements of Borrower
furnished to Bank are complete and accurate and fairly present the financial
condition of Borrower in accordance with GAAP as of the date of such financial
statements. Since the date of such financial statements, there has been no
material adverse change in the financial condition of Borrower.
5.5 Litigation. There are no actions, claims, suits or
proceedings pending, or to the knowledge of Borrower, threatened or reasonably
anticipated against or affecting Borrower in any court or before any arbitrator
or before any government commission, board, bureau or other administrative
agency which, if adversely determined, may reasonably be expected to result in
any material and adverse change in the business, operations, assets or financial
condition of Borrower.
5.6 Licenses and Approvals. Borrower has all necessary
licenses and approvals to conduct its business and engage in the activities
contemplated hereby.
5.7 Compliance with Laws. Borrower is not in violation of any
provision of any law, or of any judgment, award, rule, regulation, order,
decree, writ or injunction of any court or public regulatory body or authority
which might have a material adverse effect on the business, operations, assets
or financial condition of Borrower.
5.8 Regulation U. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Advances will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock. If requested by Bank, Borrower shall
furnish to Bank a statement in conformity with the requirements of Federal
Reserve Form U-1 referred to in said Regulation U.
5.9 Investment Company Act. Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
5.10 Payment of Taxes. Borrower has filed or caused to be
filed all federal, state and local income, excise, property and other tax
returns which are required to be filed, all such returns are true and correct,
and Borrower has paid or caused to be paid all taxes as shown on such returns or
on any assessment, to the extent that such taxes have become due.
5.11 Agreements. Borrower is not a party to any agreement,
instrument or indenture or subject to any restriction materially and adversely
affecting its business, operations, assets or financial condition, except as
disclosed to Bank. Borrower is not in known default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement, instrument, or indenture, which default could have a
material adverse effect on the business, operations, properties or financial
condition of Borrower. No holder of any indebtedness of Borrower has given
notice of any asserted default thereunder, and no liquidation or dissolution of
Borrower, and no receivership, insolvency, bankruptcy, reorganization or other
similar proceedings relative to Borrower or any of its properties is pending, or
to the knowledge of Borrower, threatened (excluding any such proceedings
relating to defaults, by obligors under notes held by Borrower that are not
pledged to Bank).
5.12 Special Representations Concerning Collateral. Borrower
hereby represents and warrants to Bank, as of the date of this Agreement and as
of the date of each Advance Request, that:
(a) Ownership. Borrower is the legal and equitable
owner and holder, free and clear of all Liens, of the Pledged Mortgages. All
Pledged Mortgages have been and will continue to be validly pledged or assigned
to Bank, subject to no other Liens.
(b) Perfection. Bank has and will at all times have a
valid, enforceable and perfected first priority security interest in each
Pledged Mortgage and all Collateral relating thereto.
(c) Borrower's Authority. Borrower has, and will
continue to have, the full right, power and authority to pledge the Collateral
pledged and to be pledged by it hereunder.
(d) Mortgage Loans. All Mortgage Loans and related
documents included in the Pledged Mortgages, (i) as of any date of
determination, have been duly executed and delivered by the parties thereto,
(ii) have been made in compliance with all applicable laws and regulations,
(iii) are and will continue to be valid and enforceable in accordance with their
terms, without defense or offset, (iv) have not been modified or amended nor
have any requirements thereof waived, (v) comply and will continue to comply
with the terms of this Agreement, (vi) except for A&D Loans, have been fully
advanced by Borrower in the face amount thereof, (vii) are first Liens on the
premises described therein (except for permitted encumbrances in the title
policy, as approved by Bank, and (viii) are not in default beyond the time
period provided in Section 2.5(c)(iv).
(h) Insurance Policies. All fire and casualty
policies covering the premises encumbered by each Mortgage included in the
Pledged Mortgages (1) name and will continue to name Borrower as the insured
under a standard mortgagee clause, (2) are and will continue to be in full force
and effect, and (3) afford and will continue to afford insurance against fire
and such other risks as are usually insured against in the broad form of
extended coverage insurance from time to time available.
(i) Flood Insurance. Pledged Mortgages secured by
premises located in a special flood hazard area are and shall continue to be
covered by special flood insurance under the National Flood Insurance Program.
VI. AFFIRMATIVE COVENANTS.
Borrower agrees that so long as the Commitment is outstanding
or there remain any obligations of Borrower to be paid or performed under this
Agreement or under the Note, Borrower will comply with the following covenants.
6.1 Payment of Note. Borrower shall punctually pay or cause to
be paid the principal of, interest on and all other amounts payable hereunder
and under the Note in accordance with the terms thereof.
6.2 Financial Statements and Other Reports. Borrower shall
deliver to Bank:
(a) Quarterly Statements. (i) Within forty-five (45)
days after the end of each of the first three (3) fiscal quarters of each fiscal
year of Borrower, consolidated financial statements of Borrower as contained in
Borrower's Form 10-Q quarterly report filed with the Securities and Exchange
Commission, and (ii) within sixty (60) days after the end of each of the first
three (3) fiscal quarters of each fiscal year of Borrower, consolidating
financial statements, which include separate financial statements of Borrower on
a non-consolidated basis (parent only), all of which shall be certified by the
chief financial officer or such other officer of Borrower approved by Bank and
prepared in accordance with GAAP.
(b) Annual Statements. (i) Within ninety (90) days
after the end of each fiscal year of Borrower, consolidated financial statements
as contained in Borrower's Form 10-K annual report filed with the Securities and
Exchange Commission, and (ii) within one hundred (100) days after the end of
each fiscal year of Borrower, consolidating financial statements, which include
separate financial statements of Borrower on a non-consolidated basis (parent
only), all of which shall be audited by independent certified public accountants
reasonably acceptable to Bank and shall include the statement of such
independent accountants that such financial statements present fairly the
financial position and results of operations of Borrower, and have been prepared
in accordance with GAAP. Borrower's annual financial statements shall also be
accompanied by Borrower's budget and business plan for the upcoming fiscal year,
all in reasonable detail and containing such information as Bank may reasonably
request.
(c) Registration Statements, etc. Promptly after the
same become publicly available, copies of such registration statements, annual,
periodic and other reports, such as proxy statements and other information, if
any, as shall be filed by Borrower with the Securities and Exchange Commission
pursuant to the requirements of the Securities Act of 1933 or the Securities
Exchange Act of 1934.
(d) Regulatory Notices, etc. Within thirty (30) days
after receipt thereof, copies of all notices, audits, filings, disclosures,
responses, reports, orders, claims, and other information filed with or made by
or from any regulatory authority (federal, state or local) having regulatory
jurisdiction over any part of Borrower's business.
(e) Status Report. Within ten (10) days after the end
of each calendar month, a status report reflecting the condition of all
Collateral, including the payments received, advances made, inspections
performed, balance outstanding, releases requested, and other information
required by Bank.
(f) Officer's Certificates. Together with each
delivery of financial statements pursuant to Sections 6.2(a) and 6.2(b), an
Officer's certificate of Borrower in the form of Exhibit F hereto.
(g) Other Information. From time to time, with
reasonable promptness, such further information regarding the business,
operations, properties or financial condition of Borrower and Mortgage Loans as
Bank may reasonably request.
6.3 Maintenance of Existence; Conduct of Business. Borrower
shall preserve and maintain its corporate existence in good standing and all of
its rights, privileges, licenses and franchises necessary or desirable in the
normal conduct of its business; conduct its business in an orderly and efficient
manner; and make no material and adverse change in the nature or character of
its business. Borrower shall not permit Borrower's net investment in EMIC to be
less than zero, as shown on Borrower's non-consolidated balance sheet, and as
determined in accordance with GAAP.
6.4 Sale of Assets; Merger. Borrower shall not, without the
consent of Bank, sell, transfer, lease, lend (except as contemplated in this
Agreement) or otherwise dispose of (whether in one transaction or in a series of
related transactions) all of its assets or any substantial part of its assets,
and Borrower will not consolidate with or merge into any other Person without
the consent of Bank, which consent may be granted or withheld in Bank's
reasonable discretion.
6.5 Compliance with Applicable Laws. Borrower shall comply
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority, a breach of which could materially adversely affect
its business, operations, assets, or financial condition; Borrower shall
maintain all other permits, licenses and approvals reasonably necessary or
desirable for Borrower to maintain and conduct the business of Borrower.
6.6 Inspection of Properties and Books. Borrower shall permit
authorized representatives of Bank, upon request by Bank to Borrower, to discuss
the business and operations of Borrower with its officers and employees, to
discuss the assets and financial condition of Borrower with its officers and
employees, and to examine its books and records and make copies or extracts
thereof, all at such reasonable times as Bank may request.
6.7 Financial Covenants.
(a) Net Worth Ratio. Borrower shall not permit the
ratio of (i) Borrower's Debt to (ii) Borrower's Tangible Net Worth to be greater
than .75:1.
(i) "Borrower's Debt" means, without limitation,
(A) any indebtedness of Borrower for borrowed money, (B) all indebtedness of
Borrower evidenced by bonds, debentures, notes, letters of credit, drafts or
similar instruments, (C) all indebtedness of Borrower to pay the deferred
purchase price of property or services received, including accounts payable and
accrued expenses arising in the ordinary course of business, (D) all capitalized
lease obligations of Borrower, (E) all debt of others secured by a lien on any
asset of Borrower, whether or not such debt is assumed by Borrower or guaranteed
by Borrower, (F) all debt of others guaranteed by Borrower, and (G) all other
indebtedness that would appear as a liability upon a balance sheet of Borrower
prepared in accordance with GAAP.
(ii) "Tangible Net Worth" means, as of any date,
Borrower's net worth as determined in accordance with GAAP, less Intangible
Assets reflected on the balance sheet of Borrower.
(iii) "Intangible Assets" means all unamortized
debt discount and expense, unamortized deferred charges, goodwill, patents,
trade marks, service marks, trade names, copyrights, write-ups of assets over
their carrying value, and all other items which would be treated as intangibles
on the consolidated balance sheet of Borrower in accordance with GAAP.
Intangible Assets shall specifically exclude any investments by Borrower in any
subsidiary which are accounted for under GAAP by the so-called "equity method."
(b) Minimum Tangible Net Worth. Borrower shall not
permit Borrower's Tangible Net Worth to be less than $14,500,000.00. For
purposes hereof, Tangible Net Worth means, as of any date, Borrower's net worth
as determined in accordance with GAAP, less Intangible Assets reflected on the
balance sheet of Borrower.
(c) Liquidity. Borrower shall maintain Liquid Assets
of not less than $2,000,000.00. For purposes hereof, Liquid Assets means cash,
certificates of deposits, marketable securities of publicly traded entities, and
the unadvanced principal balance under the Note to the extent not encumbered by
choate liens granted to third parties to secure indebtedness or other
obligations.
Borrower's compliance with the requirements in this Section 6.7 shall be
measured with respect to the separate non-consolidated financial statements of
Borrower (except that compliance with Paragraph 6.7(c) shall be measured with
respect to consolidated financial statements of Borrower) and shall be measured
quarterly (as of the end of each fiscal quarter) pursuant to the Officer's
Certificates provided under Section 6.2(f).
6.8 Notice. Borrower shall give prompt written notice to Bank
of Borrower's obtaining knowledge of (a) any action, suit or proceeding
instituted by or against Borrower in any federal or state court or before any
commission or other regulatory body (federal, state or local, domestic or
foreign), or any such proceedings threatened against Borrower, the outcome of
which could have a material adverse effect upon Borrower's business, operations,
assets or financial condition, (b) the filing, recording or assessment of any
federal, state or local tax lien for delinquent taxes against Borrower or any of
its assets, (c) the occurrence of any Event of Default hereunder or the
occurrence of any Unmatured Event of Default, or (d) the occurrence of any
material adverse change in the business, operations, assets or financial
condition of Borrower.
6.9 Payment of Debt, Taxes, etc. Borrower shall pay and
perform all obligations of Borrower promptly and in accordance with the terms
thereof and pay and discharge or cause to be paid and discharged promptly all
taxes, assessments and governmental charges or levies imposed upon Borrower or
upon its income, receipts or properties before the same shall become past due,
as well as all lawful claims for labor, materials and supplies or otherwise
which, if unpaid, might become a Lien or charge upon such properties or any part
thereof and which, in each case, may reasonably be expected to result in any
material and adverse change in the business, operations, assets, or financial
condition of Borrower; provided, however, that Borrower shall not be required to
pay taxes, assessments or governmental charges or levies or claims for labor,
materials or supplies for which Borrower shall have obtained an adequate bond or
adequate insurance or Borrower shall have set aside reasonable reserves on its
books or which are being contested in good faith and by proper proceedings which
are being reasonably and diligently pursued.
6.10 Payment of Expenses. Borrower hereby authorizes Bank to
pay any reasonable expenses, charges and levies required to be paid hereunder
(other than such expenses, charges and levies as are being contested in good
faith and by proper proceedings in accordance with Section 6.9 hereof),
notwithstanding that Borrower may not have requested Bank to make such payments,
to the extent that if not paid such expenses, charges and levies could, in
Bank's reasonable opinion, have a material and adverse affect on the Collateral
or on the existence, perfection or priority of Bank's security interest therein.
Bank may make such payments notwithstanding the fact that Borrower is in default
under the terms of this Agreement. Such payments shall be added to the
outstanding principal balance of the Note and shall be due and payable on
demand. The authorization hereby granted shall be irrevocable, and no further
direction or authorization from Borrower shall be necessary for Bank to make
such payments.
6.11 Insured Closings. If available, Borrower shall obtain and
maintain in effect at all times an insured closing letter from each title
insurance company from which mortgagee title insurance is procured, indemnifying
and holding Borrower harmless from and against the failure of the agents of such
title insurance companies to comply with the written closing instructions of
Borrower as to the Pledged Mortgages hereunder and will provide Bank with
evidence of the same from time to time upon request. Borrower agrees to
indemnify and hold harmless Bank of, from, for and against any loss, claim, or
damages, including reasonable attorneys' fees and costs, attributable to the
failure of such title insurance company, agent or approved attorney to comply
with the disbursement or instruction letter or letters of Borrower or Bank
relating to such Mortgage Loan.
6.12 Other Loan Obligations. Borrower shall perform all
obligations under the terms of each loan agreement, note, mortgage, security
agreement or debt instrument by which Borrower is bound or to which any of its
property is subject and which may reasonably be expected to result in any
material and adverse change in the business, operations, assets, or financial
condition of Borrower, and will promptly notify Bank in writing of the
cancellation or reduction of any of its other lines of credit or agreements with
any other lender.
6.13 Use of Proceeds of Advances. Each Advance shall be made
solely for the purpose of financing the origination of Eligible Mortgage Loans,
and the proceeds of each Advance shall be used by Borrower for any corporate
purpose.
6.14 Special Covenants Concerning Collateral.
(a) Ownership; Perfection of Liens. Borrower warrants
and will defend the right, title and interest of Bank in and to the Pledged
Mortgages against the claims and demands of all persons whomsoever and shall
take all action necessary to assure that Bank has and will at all times have a
valid and perfected first priority security interest in each Pledged Mortgage.
(b) Financing Statements; Further Assurances.
Borrower shall execute and deliver to Bank such Uniform Commercial Code
financing statements with respect to the Collateral as Bank may request.
Borrower also shall execute and deliver to Bank such further instruments of
sale, pledge or assignment or transfer, and such powers of attorney exercisable
upon the occurrence and during the continuation of an Event of Default, as
reasonably required by Bank, and shall do and perform all matters and things
necessary or desirable to be done or observed, for the purpose of effectively
creating, maintaining and preserving the security and benefits intended to be
afforded Bank under this Agreement and the Security Agreements. Bank shall have
all the rights and remedies of a secured party under the Uniform Commercial Code
of the State of Arizona, or any other applicable law, in addition to all rights
provided for herein.
(c) No Amendments. Borrower shall not amend or
modify, or waive any of the terms and conditions of, or settle or compromise any
claim in respect of, any Pledged Mortgages or any related rights except upon the
written consent of Bank, such consent not to be unreasonably withheld or
delayed.
(d) No Sale, Assignment or Encumbering. Borrower
shall not sell, assign, transfer or otherwise dispose of, or grant any option
with respect to, or pledge or otherwise encumber (except pursuant to this
Agreement), any of the Collateral or any interest therein.
6.15 Loan Servicing. So long as no Event of Default or
Unmatured Event of Default has occurred and is continuing, Borrower shall
service all Pledged Mortgages in accordance with the terms of the documents
related thereto and in the exercise of reasonably prudent lending and servicing
practices. Borrower shall hold any interest reserve, tax, insurance, or other
impound accounts in respect of the Pledged Mortgages in trust, without
commingling them with other funds, and shall apply the same for the purposes for
which such funds were collected.
6.16 Appraisals. Borrower acknowledges that Bank as a
federally regulated institution is required to meet certain regulations
regarding appraisals of loans secured by real estate. Borrower agrees that it
shall be Bank's agent for the purpose of ordering such appraisals and that upon
request, Borrower shall make available to Bank all information regarding such
appraisals, including, without limitation, identification of the appraisers,
copies of all appraisals, copies of all instruction letters regarding such
appraisals, and copies of all other applicable policies and procedures of
Borrower related to obtaining appraisals. In the event Bank shall ever
reasonably determine that appraisals obtained by Borrower are not in compliance
with such regulations or Bank's internal policies, Borrower shall change
Borrower's appraisal policies to Bank's reasonable satisfaction.
VII. DEFAULTS; REMEDIES.
7.1 Events of Default. The occurrence of any of the following
conditions or events shall be an event of default ("Event of Default"):
(a) Failure to Pay.
(i) Failure of Borrower to pay the principal of
any Advance due pursuant to Section 2.5 and such failure continues for five (5)
Business Days after notice to Borrower; or
(ii) Failure of Borrower to pay any installment
of interest on any Advance and such failure continues for ten (10) days after
notice to Borrower (except no notice shall be required on the Maturity Date); or
(iii) Failure of Borrower to pay any other amount
due under this Agreement or any other Loan Document within ten (10) days after
the date it is due and such failure continues for five (5) Business Days after
notice to Borrower; or
(b) Breach of Representations and Warranties. Any of
Borrower's representations or warranties made herein, in any other Loan
Document, or in any statement or certificate at any time given by Borrower in
writing pursuant hereto or in connection herewith shall be false or misleading
in any material respect on the date made or renewed; or
(c) Specified Defaults. Borrower shall default in the
performance of or compliance with Sections 6.4, 6.7, 6.13, or 6.14 hereof; or
(d) Section 5.12 Default. Borrower shall default in
the performance of or compliance with Section 5.12 hereof and such default shall
not be cured within five (5) Business Days after notice to Borrower; or
(e) Other Defaults. Borrower shall default in the
performance of or compliance with any other covenant or other term contained in
this Agreement or any other Loan Document and such default shall not be cured
within thirty (30) days after notice by Bank to Borrower of, if such default
cannot reasonably be cured within thirty (30) days, Borrower shall have failed
to promptly commend curing the default or to diligently pursue curing the
default thereafter, or to cure the default within sixty (60) days after notice
by Bank to Borrower; or
(f) Insolvency, etc. Borrower shall admit in writing
its inability to pay its debts as they mature, or make an assignment for the
benefit of creditors; or Borrower shall apply for or consent to the appointment
of any receiver, trustee or similar officer for Borrower or for all or
substantially all of its property; or Borrower shall institute (by petition,
application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debts, dissolution, liquidation, or
similar proceedings relating to Borrower under the laws of any jurisdiction; or
(g) Receivership, etc. A receiver, trustee or similar
officer shall be appointed for Borrower or for all or substantially all of its
property without the application or consent of Borrower and such appointment
shall continue undischarged for a period of sixty (60) days; or any bankruptcy,
insolvency, reorganization, arrangements, readjustment of debt, dissolution,
liquidation or similar proceedings shall be instituted (by petition, application
or otherwise) against Borrower without its consent, and shall remain undismissed
for a period of sixty (60) days; or
(h) Judgments. Any money judgment, writ or warrant of
attachment, or similar process involving in any case an amount in excess of
$200,000.00 shall be entered or filed against Borrower or any of its assets and
shall remain undischarged, unvacated, unbonded or unstayed for a period of
thirty (30) days or in any event later than five (5) days prior to the date of
any proposed execution sale thereunder; or
(i) Dissolution. Any order, judgment or decree shall
be entered against Borrower decreeing the dissolution or split up of Borrower
and such order shall remain undischarged or unstayed for a period in excess of
thirty (30) days; or
(j) Challenge to Borrower's Obligations. Borrower
shall purport to disavow its obligations hereunder or shall contest the validity
or enforceability hereof; or Bank's security interest on any portion of the
Collateral shall become unenforceable or otherwise impaired; or
(k) Other Default. An Event of Default shall occur
under any other Loan Document.
7.2 Remedies.
(a) Acceleration. Upon the occurrence of an Event of
Default, at Bank's option, the unpaid principal amount of and accrued interest
on the Note shall become due and payable automatically, without presentment,
demand or other requirements of any kind, all of which are hereby expressly
waived by Borrower.
(b) Other Remedies. Upon the occurrence of an Event
of Default (and in the case of subparagraph (b)(vi) below upon the occurrence of
an Unmatured Event of Default), Bank may also do any of the following:
(i) Enforcement of Security Interest. Foreclose
upon or otherwise enforce its security interest in and the Lien on the
Collateral to secure all payments and performance of obligations owed by
Borrower under this Agreement.
(ii) Notification of Obligors. Notify all
obligors of the Collateral that the Collateral has been assigned to Bank and
that all payments thereon are to be made directly to Bank or such other party as
may be designated by Bank; settle, compromise, or release, in whole or in part,
any amounts owing on the Collateral, or by any such obligor on terms acceptable
to Bank; enforce payment and prosecute any action or proceeding with respect to
any and all the Collateral; and where any such Collateral is in default,
foreclose on and enforce security interests in such Collateral by any available
judicial process and sell property acquired as a result of any such foreclosure.
(iii) Servicing. Act, or contract with a third
party to act, as servicer of each item of Collateral requiring servicing, such
third party's reasonable fees to be paid by Borrower.
(iv) Direct Action. Proceed against Borrower on
the Note.
(v) Suspension of Advances. Cease making any
further Advances.
(vi) Other Commitments. Terminate any commitments
contained in any agreement between Bank and Borrower to make any further loans
or advances.
(vii) Other Acceleration. Declare immediately due
and payable any one or more of all other debts or obligations of Borrower to
Bank.
(viii) Other Remedies. Otherwise exercise its
rights and remedies available hereunder, under any other Loan Document, or under
applicable law, except that Bank shall not have the right to offset against the
Obligation any amounts held by Borrower in accounts at or with Bank that are not
related to the Pledged Mortgages.
(ix) Receiver. Obtain the appointment of a
receiver of the business and assets of Borrower.
(c) Waivers. Borrower waives any right to require
Bank to (i) proceed against any Person, (ii) proceed against or exhaust any of
the Collateral or pursue its rights and remedies as against the Collateral in
any particular order, or (iii) pursue any other remedy in its power.
(d) Protection of Lien. Bank may, but shall not be
obligated to, advance any sums or do any act or thing necessary to uphold and
enforce the Lien and priority of, or the security intended to be afforded by,
any Mortgage included in the Collateral, including, without limitation, payment
of delinquent taxes or assessments and insurance premiums, to the extent
permitted by such Mortgage. All advances, charges, costs and expenses, including
reasonable attorneys' fees and disbursements, incurred or paid by Bank in
exercising any right, power or remedy conferred by this Agreement, or in the
enforcement hereof, shall become a part of the principal balance outstanding
under the Note and shall accrue interest at the rate or rates specified in the
Note.
(e) No Waivers. No failure on the part of Bank to
exercise, and no delay in exercising, any right, power or remedy provided
hereunder, at law or in equity shall operate as a waiver thereof; nor shall any
single or partial exercise by Bank of any right, power or remedy provided
hereunder, at law or in equity preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies herein provided
are cumulative and are not exclusive of any remedies provided at law or in
equity.
7.3 Binding Arbitration. All controversies and claims of any
nature arising directly or indirectly out of any and all loan transactions
between Borrower and Bank and any related agreements, instruments or documents,
shall at the written request of Borrower or Bank be arbitrated pursuant to the
applicable rules of the American Arbitration Association. The arbitration shall
occur in the State of Arizona. Judgment upon any award rendered by the
arbitrator(s) may be entered in any court having jurisdiction. The Federal
Arbitration Act shall apply to the construction and interpretation of this
arbitration agreement.
(a) Arbitration Panel. A single arbitrator shall have
the power to render a maximum award of one hundred thousand dollars. When any
party files a claim in excess of this amount, the arbitration decision shall be
made by the majority vote of three arbitrators. No arbitrator shall have the
power to restrain any act of any party.
(b) Provisional Remedies, Self-Help, and Foreclosure.
No provision of this Section 7.3 shall limit the right of any party to exercise
self-help remedies, to foreclose against any real or personal property
collateral, or to obtain any provisional or ancillary remedies (including but
not limited to injunctive relief or the appointment of a receiver) from a court
of competent jurisdiction. At Bank's option, it may enforce its rights under a
security agreement by private or public sale, a mortgage by judicial
foreclosure, and under a deed of trust either by exercise of power of sale or by
judicial foreclosure. The institution and maintenance of any remedy permitted
above shall not constitute a waiver of the right to submit any controversy or
claim to arbitration. The statute of limitations, estoppel, waiver, laches, and
similar doctrines which would otherwise be applicable in an action brought by a
party shall be applicable in any arbitration proceeding.
VIII. NOTICES.
All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder
(collectively, "Notices") shall, except as otherwise expressly provided
hereunder, be in writing and shall be delivered (i) in person, (ii) mailed,
first class, return receipt requested, postage prepaid, addressed to the
respective parties hereto at their respective addresses hereinafter set forth
or, as to any such party, at such other address as may be designated by it in a
notice to the other or (iii) by telecopier to the respective parties hereto at
their respective telecopier numbers hereinafter set forth or, as to any such
party, at such other telecopier number as may be designated by it in a notice to
the other. All Notices shall be conclusively deemed to have been properly given
or made two (2) Business Days after being duly deposited in the mails, addressed
as set forth below or, in the case of notices delivered personally or by
telecopier, upon actual receipt thereof by the party to whom such notice is
directed:
if to Borrower: Homeplex Mortgage Investments Corporation
5333 North 7th Street
Suite 219
Phoenix, Arizona 85014-2803
Telecopier: (602) 230-1690
with a copy to: Mariscal, Weeks, McIntyre & Friedlander, P.A.
2901 North Central Avenue, Suite 200
Phoenix, Arizona 85012-2705
Attn: Fred Fathe
Telecopier: (602) 279-2128
if to Bank: Bank One, Arizona, NA
Real Estate Finance Division
Post Office Box 29542
Phoenix, Arizona 85038
Attn: Dept. A-383
Telecopier: (602) 221-1372
IX. REIMBURSEMENT OF EXPENSES; INDEMNITY.
Borrower shall:
(a) pay all out-of-pocket costs and expenses of Bank,
including reasonable attorneys' fees, in connection with the negotiation,
documentation, and enforcement of this Agreement, the Note, and other documents
and instruments related hereto and the making and repayment of the Advances and
the payment of interest thereon;
(b) upon demand, pay, and hold Bank and any holder of
the Note harmless of, from, for and against, any and all present and future
stamp, documentary and other similar taxes with respect to the foregoing matters
and save Bank and the holder or holders of the Note harmless from and against
any and all liabilities with respect to or resulting from any delay or omission
to pay such taxes;
(c) upon demand, indemnify, pay and hold harmless
Bank and any of its officers, directors, employees or agents and any subsequent
holder of the Note of, from, for and against any and all liabilities,
obligations losses, damages, penalties, judgments, suits, costs, expenses
(including reasonable attorney's fees) and disbursements of any kind whatsoever
arising out of or relating to this Agreement, including without limitation,
(i) any suit, claim or demand on account of any
action or failure to act by Borrower,
(ii) any suit, claim or demand arising from or
relating to the failure of any Mortgage Loans to be made in full compliance with
all applicable laws and regulations,
(iii) any other claims, defenses or offsets with
respect to any Mortgage Loans or the failure of any Mortgage Loan to otherwise
comply with the provisions of this agreement, and
(iv) any suit, claim or demand arising out of any
actual or alleged disposal, generation, manufacture, presence, processing,
production, release, storage, transportation, treatment, or use of any and all
nuclear, toxic, radioactive or other hazardous waste on any property encumbered
by any of the Mortgages regardless of whether intentional, negligent, or
accidental.
(all of the above are collectively the "Indemnified Liabilities").
X. MISCELLANEOUS.
10.1 Terms Binding Upon Successors; Survival of
Representations. The terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. All representations, warranties, covenants and
agreements herein contained on the part of Borrower shall survive the making of
any Advance and the execution of the Note, and shall be effective so long as the
Commitment is outstanding or there remains any obligation of Borrower hereunder
or under the Note to be paid or performed.
10.2 Assignment. This Agreement may not be assigned by
Borrower. This Agreement and the Note, along with Bank's security interest in
any or all of the Collateral, may, at any time, be transferred or assigned, in
whole or in part, by Bank, and any assignee thereof may enforce this Agreement,
the Note and such interest. Bank shall use its reasonable efforts to provide
Borrower with notice of any such transfer or assignment; provided, however, that
Bank's failure to provide such notice shall not in any way invalidate such
transfer or assignment or otherwise constitute a breach by Bank of its
obligations pursuant to this Agreement, and any payments made or performance
rendered by Borrower to Bank prior to Borrower's receipt of such notice shall be
deemed to have been duly made or rendered under this Agreement.
10.3 Participation. Borrower agrees that Bank may enter into
agreements with other financial institutions to participate in this credit
accommodation. Borrower agrees to execute all documents and instruments
reasonably requested by Bank in order to facilitate said participation. Bank
shall use reasonable efforts to notify Borrower of any such participation.
10.4 Amendments. This Agreement may not be amended, modified
or supplemented except in a writing signed by the parties hereto.
10.5 Governing Law. This Agreement and the Note shall be
governed and construed by the laws of the State of Arizona.
10.6 Entire Agreement. This Agreement and the documents
referred to in this Agreement represent the entire agreement between, and
reflect the reasonable expectations of, Borrower and Bank with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date set forth above.
BORROWER:
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION,
a Maryland corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
BANK:
BANK ONE, ARIZONA, NA, a national banking
association
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
<PAGE>
LIST OF EXHIBITS
A Form of Term Sheet
B Form of Assignment of Beneficial Interest
C Form of Security Agreement
D Form of UCC-1 Financing Statements
E List of Additional Documents
F Form of Officer's Certificate
<PAGE>
EXHIBIT A
TERM SHEET
This Term Sheet is executed pursuant to that Loan Agreement between BANK ONE,
ARIZONA, NA, a national banking association ("Bank") and HOMEPLEX MORTGAGE
INVESTMENTS CORPORATION, a Maryland corporation ("Borrower"), dated
______________, 1995, as amended, modified, extended, renewed, restated or
supplemented from time to time. Capitalized terms not otherwise defined herein
shall have the meaning set forth in the Loan Agreement.
Maker of Mortgage Note:_______________________________________________________
Amount of Mortgage Note:______________________________________________________
Interest Rate:________________________________________________________________
Payment Schedule: ____________________________________________________________
Type of Loan: A&D Loan _____ Acquisition Loan _____
Description of Property Subject to Deed of Trust______________________________
______________________________________________________________________________
Improvements to be Constructed Under A&D Loan:________________________________
______________________________________________________________________________
Release Schedule:_____________________________________________________________
Release Price:________________________________________________________________
Maximum Allowed Advances: $_____________________ (Acquisition Advances)
$_____________________ (Development Advances)
$_____________________ Total
Advance Rate: _________________ percent (___%)
Commitment Fee: $__________________________
Date of execution of Term Sheet:____________________________
HOMEPLEX MORTGAGE INVESTMENTS BANK ONE, ARIZONA, NA
CORPORATION
By___________________________ By______________________________
Its______________________ Its_________________________
<PAGE>
When recorded, return to:
BANK ONE, ARIZONA, NA
Post Office Box 29542
Phoenix, Arizona 85038
Real Estate Finance Division
Attention: Dept. A-567
EXHIBIT B
ASSIGNMENT OF BENEFICIAL INTEREST UNDER
DEED OF TRUST
-------------------------
KNOW ALL MEN BY THESE PRESENTS:
That HOMEPLEX MORTGAGE INVESTMENTS CORPORATION, a Maryland corporation,
as Beneficiary under that Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing described below ("Assignor"), for Ten Dollars ($10.00) and
other good and valuable consideration, the receipt of which is hereby
acknowledged, does by these presents grant, bargain, sell, assign, transfer and
set over unto BANK ONE, ARIZONA, NA, a national banking association, whose
mailing address is Real Estate Finance Division, Post Office Box 29542, Phoenix,
Arizona 85038, Attention: Dept. A-383, all of its right, title and interest as
Beneficiary under that Deed of Trust made, executed and delivered by
_______________________ by the use and benefit of Assignor, dated
________________, and recorded on _________________, at Recorder's No.
______________, in the records of Maricopa County, Arizona;
TOGETHER WITH the obligation therein described, all monies due and to
become due thereunder, and all interest thereon, and all rights arising
therefrom.
IN WITNESS WHEREOF, these presents are executed as of the ______ day of
____________________, 19___.
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION,
a Maryland corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ASSIGNOR
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this _____ day of
_____________________, 19___, by _______________________________________, the
____________________________________________ of HOMEPLEX MORTGAGE INVESTMENTS
CORPORATION, a Maryland corporation, on behalf of that corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------------------------
Notary Public
My commission expires:
- ----------------------
<PAGE>
EXHIBIT C
SECURITY AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
THIS SECURITY AGREEMENT is made and entered into as of the _____ day of
_____________, 19___, by HOMEPLEX MORTGAGE INVESTMENTS CORPORATION, a Maryland
corporation (hereinafter called "Assignor"), whose chief executive office is
located at 5333 North 7th Street, Suite 219, Phoenix, Arizona 85014-2803, in
favor of BANK ONE, ARIZONA, NA, a national banking association, and its
successors and assigns (hereinafter called "Assignee"), whose address is Real
Estate Finance Division, Post Office Box 29542, Phoenix, Arizona 85038,
Attention: Dept. A-383. Assignor does hereby grant, bargain, sell, assign,
transfer, convey, mortgage and pledge to Assignee, and does hereby grant to
Assignee a security interest in, all of Assignor's right, title and interest,
legal and equitable, in and to the following:
(a) That Promissory Note dated _________________, made by
_______________________________________________ (hereinafter called the
"Obligor") payable to the order of Assignor, in the original principal
amount of $_____________________, and the indebtedness and obligations
evidenced thereby, all monies due and to become due thereunder, all
interest thereon and all rights arising therefrom or with respect
thereto (hereinafter called the "Collateral Note");
(b) That Deed of Trust dated ________________________, made,
executed and delivered by ________________________________________
______________________________________________________________ for the
use and benefit of Assignor, and recorded on __________________, at
Recorder's No. _______________, in the records of Maricopa County,
Arizona (hereinafter called the "Collateral Deed of Trust");
(c) All rights, liens and security interests existing with
respect to, or as security for, the Collateral Note or any part
thereof;
(d) All hazard and liability insurance policies, title
insurance policies, (or any binders or commitments to issue any of such
policies) and all condemnation proceeds and insurance proceeds with
respect to or relating to the Collateral Deed of Trust;
(e) All insurance and guarantees with respect to the
Collateral Note, or any binders or commitments or agreements to issue
any such insurance or guarantees, and all insurance proceeds, with
respect to Collateral Note;
(f) All files, surveys, certificates, correspondence,
appraisals, computer programs, tapes, discs, cards, accounting records,
and other records, information, and data of Assignor relating to the
Collateral Note, including all information, records, data, programs,
tapes, discs and cards necessary to administer and service the
Collateral Note;
(g) All insurance proceeds and condemnation awards which may
be payable in respect of the premises encumbered by the Collateral Deed
of Trust;
(h) All other indebtedness and obligations secured by the
Collateral Deed of Trust, all monies due and to become due under the
Collateral Note or the Collateral Deed of Trust, all interest thereon
and all rights arising therefrom or with respect thereto, and all
right, title and interest, legal and equitable, present and future, of
Assignor, and its successors and assigns, in and to the real property
described in the Collateral Deed of Trust;
[(i) _______________________ Account No. ____________________
maintained at _____________________________________, together with all
shares, deposits, investments, proceeds and interest of every kind
evidenced by such Account, and together with all sums of money now or
hereafter deposited therein and all monies and claims for money now or
hereinafter due or payable thereon or with respect thereto ("Account");
(j) describe the pledge agreement, signature card, and other
information signed and/or provided by Obligor in connection with the
Account]; and
(k) All products and proceeds of any of the foregoing
(all of the foregoing are hereinafter collectively called the "Collateral").
FOR THE PURPOSE OF SECURING, in such order of priority as Assignee may
elect:
(a) Payment of the sum of FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00) according to the terms of that Revolving Line of Credit
Promissory Note dated ___________________, 1995, made by Assignor,
payable to the order of Assignee, evidencing a revolving line of
credit, all or any part of which may be advanced to Assignor, repaid by
Assignor and readvanced to Assignor, from time to time, subject to the
terms and conditions thereof, with interest thereon, extension and
other fees, late charges, prepayment premiums and attorneys' fees,
according to the terms thereof, and all extensions, modifications,
renewals or replacements thereof (hereinafter called the "Note");
(b) Payment, performance and observance by Assignor of each
covenant, condition, provision and agreement contained herein and of
all monies expended or advanced by Assignee pursuant to the terms
hereof, or to preserve any right of Assignee hereunder, or to protect
or preserve the Collateral or any part thereof;
(c) Payment, performance and observance by Assignor of each
covenant, condition, provision and agreement contained in that Loan
Agreement of even date with the Note by and between Assignor and
Assignee (hereinafter called the "Loan Agreement") and in any other
document or instrument related to the indebtedness hereby secured and
of all monies expended or advanced by Assignee pursuant to the terms
thereof or to preserve any right of Assignee thereunder;
(d) Payment and performance of any and all other indebtedness,
obligations and liabilities of Assignor to Assignee of every kind and
character, direct and indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, whether such
indebtedness is from time to time reduced and thereafter increased or
entirely extinguished and thereafter reincurred.
All of the indebtedness and obligations secured hereby are hereinafter
collectively called the "Obligation."
PROVIDED, HOWEVER, that, if Assignor shall fully pay and perform the Obligation
according to the terms thereof, then Assignee shall release its interest in the
Collateral.
1. Assignor represents and warrants that:
(a) Assignor is the true and lawful owner of the Collateral
and has full power, right and authority to execute and deliver this
Agreement;
(b) The Collateral, as of the date hereof, is valid and in
good and current standing, not having been altered, amended, changed,
terminated or cancelled in any way by Assignor, and no breach or
default exists therein or thereunder;
(c) The Collateral represents a bona fide, valid and legally
enforceable obligation of the person or entity named therein in
accordance with its terms. No payments have been made, collected or
remitted under the Collateral in advance of the accrual thereof;
(d) No known defense, setoff, claim or counterclaim exists
against Assignor that could be asserted against Assignee, whether in
any proceeding to enforce Assignee's interest in the Collateral or
otherwise;
(e) Assignor has not conveyed, transferred, or assigned the
Collateral or any of its rights or interest therein and has not
executed any other document or instrument that might prevent or limit
Assignee from operating under the terms, conditions and provisions of
this Agreement; and
(f) Assignor will make no other assignment of the Collateral
or of any right or interest therein.
2. Upon the execution of this Agreement, Assignor shall endorse the
Collateral Note to Assignee and deliver it immediately to Assignee or Assignee's
agent. If the Collateral Note is held or to be held by a collection agent or
other third party, then, after the execution of this Agreement, the collection
agent or other third party shall hold the Collateral Note solely for the benefit
of and as agent for Assignor and Assignee; provided, however, that if an Event
of Default or an Unmatured Event of Default has occurred and is continuing, the
collection agent or other third party shall hold the Collateral Note solely for
the benefit of and as agent for Assignee. In addition, Assignor shall assign the
Collateral Deed of Trust to Assignee and Assignee may record such assignment.
Assignor hereby authorizes and directs each obligor under the Collateral, on and
after the date of this Agreement, (i) to remit directly to Assignee (or to a
collection agent designated by Assignee) all principal and other amounts (except
interest) arising out of the Collateral, and (ii) upon demand of Assignee after
an Event of Default or an Unmatured Event of Default has occurred and is
continuing, to remit directly to Assignee (or to a collection agent designated
by Assignee) all interest payments arising out of the collateral. Assignor
hereby relieves each obligor under the Collateral from any liability to Assignor
by reason of the remittal of such proceeds directly to Assignee. Assignor agrees
that, within two (2) business days of the receipt of such demand, it will remit
to Assignee all such funds coming into its possession. If the Collateral Note is
to be held by a collection agent, that collection agent is hereby instructed to
remit promptly to Assignee all payments received by the collection agent, less
normal and customary servicing fees. Assignee may apply all proceeds received to
the payment of the Obligation, whether or not then due, in such order and manner
as Assignee in its sole discretion may determine, subject to the provisions of
the Loan Agreement.
3. Assignor does hereby make, constitute and appoint Assignee, and its
successors and assigns, Assignor's true and lawful attorney in fact, in
Assignor's name, place and stead, or otherwise, upon the occurrence of any Event
of Default or Unmatured Event of Default, as those terms are defined in the Loan
Agreement, and at any time while such Event of Default or Unmatured Event of
Default is continuing:
(a) To do all acts and to execute, acknowledge, obtain and
deliver any and all instruments, documents, items or things necessary,
proper or required as a term, condition or provision of the Collateral
or in order to exercise any rights of Assignor under the Collateral or
to receive and enforce any performance due Assignor under the
Collateral;
(b) To give any notices, instructions, or other
communications to any other parties to the Collateral or to any
person or entity in connection therewith;
(c) To demand and receive all performances due under or with
respect to the Collateral and to take all lawful ways and means for the
enforcement thereof and to compromise and settle any claim or cause of
action in Assignor arising from or related to the Collateral and give
acquittances and other sufficient discharges relating thereto; and
(d) To file any claim or to take any other action or
proceeding, either in its own name or in that of its nominee, or in the
name of Assignor or otherwise, to enforce performances due under or
related to the Collateral or to protect and preserve the right, title
and interest of Assignee hereunder.
The power of attorney given herein is a power coupled with an interest and shall
be irrevocable so long as any part of the Obligation remains unpaid or
unperformed. Assignee shall have no obligation to exercise any of the foregoing
rights and powers in any event.
4. No change, amendment or modification shall be made to the Collateral
or to the instructions of Assignor contained herein without the prior written
approval of Assignee, which approval will not be unreasonably withheld or
delayed.
5. Assignor shall promptly notify Assignee after Assignor obtained
knowledge of any default or breach of or under the Collateral or of any failure
of performance or other condition that, after notice or lapse of time, or both,
could become a default or breach under the Collateral.
6. The occurrence of any of the following events or conditions shall
constitute and is hereby defined to be an "Event of Default":
(a) Any Event of Default under the Loan Agreement, the Note or
any other document or instrument executed or delivered in connection
with the Obligation.
(b) Any levy or execution upon, or judicial seizure of, any
portion of the Collateral or any other collateral or security for the
Obligation.
(c) Any attachment or garnishment of, or the existence or
filing of any lien or encumbrance against, any portion of the
Collateral or any other collateral or security for the Obligation that
is not removed and released within fifteen (15) days after its
creation.
(d) The institution of any legal action or proceedings to
enforce any lien or encumbrance upon any portion of the Collateral or
any other collateral or security for the Obligation, that is not
dismissed within fifteen (15) days after its institution.
(e) The abandonment by Assignor of all or any part of the
Collateral.
(f) The loss, theft or destruction of, or any substantial
damage to, any portion of the Collateral or any other collateral or
security for the Obligation that is not adequately covered by
insurance.
7. Upon the occurrence of any Event of Default, and at any time while
such Event of Default is continuing, Assignee may do one or more of the
following:
(a) Declare the entire Obligation to be immediately due and
payable, and the same, with all costs and charges, shall be collectible
thereupon by action at law.
(b) To the extent that the rights, title and interests covered
hereby shall consist of personal property rights and interests,
exercise any or all of the remedies of a secured party under the
Uniform Commercial Code with respect to such personal property covered
hereby. If Assignee should proceed to dispose of such personal property
in accordance with the provisions of the Uniform Commercial Code, ten
(10) days' notice by Assignee to Assignor shall be deemed to be
commercially reasonable notice under any provision of the Uniform
Commercial Code requiring notice.
(c) If applicable, commence proceedings for foreclosure of
this Agreement in the manner provided by law for the foreclosure of
realty mortgages.
8. In the event proceedings are commenced for foreclosure of this
Agreement in the manner provided by law for the foreclosure of realty mortgages,
then at any time after the institution of such foreclosure proceedings, upon
application of Assignee, a receiver may be appointed by any court of competent
jurisdiction to take charge of all of Assignor's rights, title and interest
assigned hereunder; to collect payments with respect to, and enforce any or all
rights of security in connection with, the Collateral; and to apply the same to
protect and preserve such rights, title and interest, to the payment of its own
compensation and to the payment of Obligation.
9. In addition to any remedies provided herein for an Event of Default,
Assignee shall have all the rights and remedies afforded a secured party under
the Uniform Commercial Code and all other legal and equitable remedies allowed
under applicable law. No failure on the part of Assignee to exercise any of its
rights hereunder arising upon any Event of Default shall be construed to
prejudice its rights upon the occurrence of any other or subsequent Event of
Default. No delay on the part of Assignee in exercising any such rights shall be
construed to preclude it from the exercise thereof at any time while that Event
of Default is continuing. Assignee may enforce any one or more remedies or
rights hereunder successively or concurrently. By accepting payment or
performance of any of the Obligation after its due date, Assignee shall not
thereby waive the agreement contained herein that time is of the essence, nor
shall Assignee waive either its right to require prompt payment or performance
when due of the remainder of the Obligation or its right to consider the failure
to so pay or perform an Event of Default.
10. The proceeds of any sale or any other enforcement of Assignee's
security interest in all or any part of the Collateral shall be applied by
Assignee:
First, to the payment of the costs and expenses of such sale
or enforcement, including reasonable compensation to Assignee's agents and
counsel, and all expenses, liabilities and advances made or incurred by or on
behalf of Assignee in connection therewith;
Second, to the payment of any other amounts due (other than
principal and interest) under the Note or this Agreement;
Third, to the payment of interest accrued and unpaid on the
Note;
Fourth, to the payment of the outstanding principal balance of
the Note; and
Finally, to the payment to Assignor or to its successors or
assigns, or as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
If the proceeds of any such sale are insufficient to cover the costs and
expenses of such sale, as aforesaid, and the payment in full of the Note and all
other amounts due hereunder, Assignor shall remain liable for any deficiency.
11. Assignee, by accepting this Agreement, shall not be subject to any
obligation or liability under the Collateral, including, without limitation, any
duty to perform any of the covenants, conditions, provisions or agreements
thereof, but all such obligations and liabilities shall continue to rest upon
Assignor as though this Agreement had not been made.
12. In addition to all of its other rights hereunder, Assignee shall
have the right at any time to appear in and defend and be represented by counsel
of its own choice in any action or proceeding purporting to affect Assignor's
rights under the Collateral or Assignee's rights under this Agreement.
13. Assignor shall indemnify and hold Assignee harmless from any and
all damages and losses arising as a result of or related to the Collateral, this
Agreement or the exercise by Assignee of any of its rights under this Agreement,
including, without limitation, any judgment, amounts paid in settlement, and all
costs and expenses, including reasonable attorneys' fees, incurred in defending
or settling any action, suit or proceeding in connection with the foregoing, but
excluding any and all damages and losses arising from Assignee's gross
negligence or willful malfeasance.
14. All sums advanced or paid by Assignee under the terms hereof, all
amounts paid, suffered or incurred by Assignee in exercising any authority
granted herein, including reasonable attorneys' fees, and all other amounts due
Assignee from Assignor in connection with this Agreement shall be added to the
Obligation, shall be secured by all deeds of trust and other lien and security
documents securing the Obligation, shall bear interest at the highest rate
payable on any of the Obligation until paid, and shall be due and payable by
Assignor to Assignee immediately without demand.
15. Neither the execution and delivery of this Agreement nor any
failure on the part of any obligor under the Collateral to comply with, honor,
and perform in accordance with the terms thereof shall affect the liability of
any party to pay and perform the Obligation.
16. The taking of this security by Assignee shall not effect the
release of any other collateral now or hereafter held by Assignee as security
for the Obligation, nor shall the taking of additional security for the
Obligation hereafter effect a release or termination of this instrument or any
terms, conditions or provisions hereof.
17. Assignor, upon request of Assignee, will execute and deliver such
additional documents, including but not limited to financing statements, and do
such other acts as may be reasonably necessary to fully implement the intent of
this Agreement and to perfect and preserve the rights and interests of Assignee
hereunder and the priority thereof.
18. Time is of the essence hereof. This Agreement shall be binding upon
Assignor and its successors and assigns and shall inure to the benefit of
Assignee and its successors and assigns; this Agreement, however, is not
intended to confer any right or remedies upon any person other than the parties
hereto and their successors and assigns.
19. Assignor shall pay all costs and expenses, including without
limitation costs of Uniform Commercial Code searches, court costs and reasonable
attorneys' fees, incurred by Assignee in enforcing payment and performance of
the Obligation or in exercising the rights and remedies of Assignee hereunder.
All such costs and expenses shall be secured by this Agreement and by all deeds
of trust and other lien and security documents securing the Obligation. In the
event of any court proceedings, court costs and attorneys' fees shall be set by
the court and not by jury and shall be included in any judgment obtained by
Assignee.
20. No failure or delay on the part of Assignee in exercising any
right, power, or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. The rights, powers and remedies hereunder are
cumulative and may be exercised by Assignee either independently of or
concurrently with any other right, power, or remedy contained herein or in any
instrument executed in connection with the Obligation.
21. At such time as Assignor is entitled to the release by Assignee of
its interest in the Collateral, Assignee shall re-endorse the Collateral Note to
Assignor, without recourse, and shall reassign the Collateral Deed of Trust to
Assignor.
22. By executing this Agreement, Assignor acknowledges receipt of a
copy hereof. A carbon, photographic or other reproduced copy of this Agreement
and/or any financing statement relating hereto shall be sufficient for filing
and/or recording as a financing statement. This Agreement shall be governed by
and construed according to the laws of the State of Arizona.
IN WITNESS WHEREOF, these presents are executed as of the date
indicated above.
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION,
a Maryland corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ASSIGNOR
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this _____ day of
________________, 19___, by ____________________________________________, the
__________________________ of HOMEPLEX MORTGAGE INVESTMENTS CORPORATION, a
Maryland corporation, on behalf of that corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------------------------
Notary Public
My commission expires:
- ----------------------
<PAGE>
ACKNOWLEDGMENT OF COLLECTION AGENT
The undersigned has received a copy of the foregoing Security Agreement
(the "Security Agreement") and hereby acknowledges, confirms and agrees as
follows:
1. The undersigned, as collection agent, holds the original of the
Collateral Note in its collection escrow no. _______________________. The
Collateral Note is made by __________________________________________, dated
_________________, and is in the original principal amount of $_____________.
The unpaid principal balance of the Collateral Note, as shown in the records of
the undersigned, is $_________________. The Collateral Note has been endorsed to
the order of Assignee and the undersigned has provided Assignee with a true and
correct copy of the Collateral Note, as endorsed.
2. From and after the date of the Security Agreement, the undersigned
shall hold the Collateral Note solely for the benefit of and as agent for
Assignee and Assignor. If an Event of Default or an Unmatured Event of Default
has occurred and is continuing, the undersigned shall hold the Collateral Note
solely for the benefit of and as agent for Assignee.
3. All payments or proceeds received by the undersigned under or in
connection with the Collateral Note (except interest), less normal and customary
servicing fees, shall be promptly remitted to Assignee. After an Event of
Default or an Unmatured Event of Default has occurred and is continuing, all
interest payments shall be promptly remitted to Assignee.
4. The undersigned shall accept no modification or amendment to its
collection escrow described above without the prior written consent of Assignee.
The capitalized terms used in this Acknowledgment have the same meaning
as in the Security Agreement.
IN WITNESS WHEREOF, these presents are executed as of the _____ day of
_________________, 19___.
------------------------------------------
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this _____ day of
________________, 19___, by ____________________________________________, the
__________________________ of _________________________________________, a(n)
__________________ corporation, on behalf of that corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------------------------
Notary Public
My commission expires:
- ----------------------
<PAGE>
EXHIBIT D
STATE OF ARIZONA, County of ______________ ss. )
on ________________, 19__ at _____ o'clock __.M. )
)
I hereby certify that the within instrument was filed )
(recorded) at the request of ________________________ )
Docket _________, Page ______, File number _________, )
Records of this office. )
)
WITNESS my hand and official seal the day and year first )
above written. __________________ By___________________ )
County Recorder ) Secretary of State
- ------------------------------------------------------------------------------
ARIZONA UNIFORM COMMERCIAL CODE FINANCING STATEMENT--FORM UCC-1
Return copy or recorded original to: Bank One, Arizona, NA
Post Office Box 29542
Phoenix, Arizona 85038
Attn: Real Estate Finance Division
Department A-567
- ------------------------------------------------------------------------------
This FINANCING STATEMENT is presented for filing (recording) pursuant to the
Arizona Uniform Commercial Code.
- ------------------------------------------------------------------------------
1. Debtor(s): HOMEPLEX MORTGAGE INVESTEMENTS
CORPORATION, a Maryland corporation
(last name first & address) 5333 North 7th Street
Suite 219
Phoenix, Arizona 85014-2803
- ------------------------------------------------------------------------------
2. Secured Party(ies): BANK ONE, ARIZONA, NA, a national
(and address) banking association
Real Estate Finance Division
Post Office Box 29542
Phoenix, Arizona 85038
Attention: Dept. A-383
- ------------------------------------------------------------------------------
3. Assignee of Secured Party(ies):
(and address)
- ------------------------------------------------------------------------------
4. Proceeds of collateral (X) If checked, products of collateral
are also covered. are also covered.
- ------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of
property:
See Schedule "A" attached hereto and by this reference incorporated
herein.
- ------------------------------------------------------------------------------
6. If the collateral is crops, the crops are growing or to be grown on the
following described real estate:
- ------------------------------------------------------------------------------
7. If the collateral is (a) goods which are or are to become fixtures; (b)
timber to be cut; or (c) minerals or the like (including oil and gas),
or accounts resulting from the sale thereof at the wellhead or minehead
to which the security interest attaches upon extraction, the legal
description of the real estate concerned is:
See Schedule "A" attached hereto and by this reference incorporated
herein as if fully set forth.
And, this Financing Statement is to be recorded in the office where a
mortgage on such real estate would be recorded. If the Debtor does not
have an interest of record, the name of a record owner is:
- ------------------------------------------------------------------------------
8. This Financing Statement is signed by the Secured Party instead of the
Debtor to perfect or continue perfection of a security interest in:
( ) collateral already subject to a security interest in another
another jurisdiction when it was brought into this state.
( ) proceeds of collateral because of a change in type or use.
( ) collateral as to which the filing has lapsed or will lapse.
( ) collateral acquired after a change of name, identity, or corporate
structure of the Debtor.
- ------------------------------------------------------------------------------
<PAGE>
Dated: ______________________
(Use
Signature(s) of Debtor(s) or whichever Signature of Secured Party or
Assignor is Assignee
applicable)
HOMEPLEX MORTGAGE INVESTMENTS BANK ONE, ARIZONA, NA, a national
CORPORATION, a Maryland corporation banking association
By:____________________________ By:_____________________________
Name:__________________________ Name:___________________________
Title:_________________________ Title:__________________________
<PAGE>
SCHEDULE "A"
All of Debtor's right, title and interest, legal and equitable, in and to the
following:
(a) That Promissory Note dated _________________, made by
_____________________________________________ (hereinafter called the
"Obligor") payable to the order of Debtor, in the original principal
amount of $_____________________, and the indebtedness and obligations
evidenced thereby, all monies due and to become due thereunder, all
interest thereon and all rights arising therefrom or with respect
thereto (hereinafter called the "Collateral Note"); and
(b) That Deed of Trust dated _____________________________,
made, executed and delivered by _____________________
______________________________________________________________ for the
use and benefit of Debtor, and recorded on __________________, at
Recorder's No. ____________________, in the records of Maricopa County,
Arizona (hereinafter called the "Collateral Deed of Trust");
(c) All rights, liens and security interests existing with
respect to, or as security for, the Collateral Note or any part
thereof;
(d) All hazard and liability insurance policies, title
insurance policies, (or any binders or commitments to issue any of such
policies) and all condemnation proceeds and insurance proceeds with
respect to or relating to the Collateral Deed of Trust;
(e) All insurance and guarantees with respect to the
Collateral Note, or any binders or commitments or agreements to issue
any such insurance or guarantees, and all insurance proceeds, with
respect to Collateral Note;
(f) All files, surveys, certificates, correspondence,
appraisals, computer programs, tapes, discs, cards, accounting records,
and other records, information, and data of Debtor relating to the
Collateral Note, including all information, records, data, programs,
tapes, discs and cards necessary to administer and service the
Collateral Note;
(g) All insurance proceeds and condemnation awards which may
be payable in respect of the premises encumbered by the Collateral Deed
of Trust;
(h) All other indebtedness and obligations secured by the
Collateral Deed of Trust, all monies due and to become due under the
Collateral Note or the Collateral Deed of Trust, all interest thereon
and all rights arising therefrom or with respect thereto, and all
right, title and interest, legal and equitable, present and future, of
Debtor, and its successors and assigns, in and to the real property
described in the Collateral Deed of Trust;
[(i) _______________________ Account No. ____________________
maintained at _____________________________________, together with all
shares, deposits, investments, proceeds and interest of every kind
evidenced by such Account, and together with all sums of money now or
hereafter deposited therein and all monies and claims for money now or
hereinafter due or payable thereon or with respect thereto ("Account");
(j) describe the pledge agreement, signature card, and other
information signed and/or provided by Obligor in connection with the
Account]; and
(k) All products and proceeds of any of the foregoing.
<PAGE>
EXHIBIT "E"
LIST OF ADDITIONAL DOCUMENTS
1. Title Policy. An ALTA title insurance loan policy in favor of Borrower and
its successors and assigns, in the amount of the original principal balance of
the Mortgage Loan, with only exceptions permitted by Bank, with endorsements
3R/5, 6.1 and 8, with an endorsement naming Bank as the insured thereunder, or
the unconditional commitment of the title company to issue such endorsement on
recordation of the Assignment described above.
2. Appraisal. A current appraisal of the premises subject to the Mortgage and,
if applicable, the Improvements, by an appraiser acceptable to Bank and showing
a value for the premises and, if applicable, completed Improvements,
satisfactory to Bank. Bank may require a reappraisal at Borrower's expense no
more often than annually.
3. Liability Insurance. Policies of insurance evidencing personal liability and
property damage liability coverages in amounts designated by Bank for each
occurrence, and for injury or death of any person and for property damage that
shall be in effect with respect to the obligor under the Mortgage Note, Borrower
and its assigns, and the contractor (with respect to A&D Loans).
4. Casualty Insurance. Original policies of fire and extended coverage insurance
on the improvements issued by insurance companies approved by Bank in an amount
not less than the full insurable value on a replacement-cost basis of the
insured Improvements with standard, without contribution, mortgagee's loss
payable endorsements in favor of Borrower and its assigns.
5. Flood Area. Evidence whether the premises covered by the Mortgage, or any
part thereof, lies within a "special flood hazard area" as designated on maps
prepared by the Department of Housing and Urban Development.
6. Closing Draft. If applicable and if required by Bank, a certified copy of
Borrower's draft for the funds evidenced by the Mortgage Loan.
7. Environmental. An environmental questionnaire and disclosure statement
completed and signed by the obligor under the Mortgage Note covering the current
and former condition and uses of the premises covered by the Mortgage and
adjacent property, followed by a current preliminary environmental assessment
(Phase I assessment) of such premises and adjacent property, plus any sampling
and analysis (Phase II assessment) or special limited assessment that Bank may
require after review of the Phase I assessment, together with any other
environmental investigations and reports that Bank may require, all of which
shall be by an environmental consulting firm acceptable to Bank and shall be
certified by separate letter to Bank and none of which shall reveal any existing
or potential environmental condition adversely affecting the use or value of
such premises.
8. Zoning. Evidence that the premises covered by the Mortgage are properly zoned
for the improvements located or to be located thereon and their intended use and
that such zoning is final and not subject to challenge.
9. Utilities. Evidence that all utilities and services to the premises covered
by the Mortgage and any improvements located or to be located thereon, including
without limitation water, sewer, gas, electric and telephone, are available, or
will be available as required, and will be provided in amounts that are
sufficient to service future onsite improvements for their intended use.
10. Leases. Copies of all lease agreements affecting the premises covered by the
Mortgage and any improvements located or to be located thereon.
11. Agreements. If required by Bank, copies of all other agreements between the
obligor under the Mortgage Loan and any architects, engineers, managers or
supervisors related to the construction and maintenance of the premises covered
by the Mortgage and any improvements located or to be located thereon, together
with written agreements by such persons or entities that they will perform for
Bank the services contracted to such obligor, notwithstanding the occurrence of
any default under the Mortgage Loan and any trustee's sale or foreclosure of the
Mortgage (provided that such persons or entities continue to receive payments
under their respective contracts), and the consent of such persons or entities
to the collateral assignment to Bank of their respective contracts.
12. CC&Rs. Copies of any Declaration of Covenants, Conditions and Restrictions
and related documents pertaining to the premises covered by the Mortgage and any
improvements located or to be located thereon.
13. Taxes. Evidence that all taxes and assessments levied against or affecting
the premises covered by the Mortgage have been paid current.
14. Partnership Documents. If required by Bank, a copy of the executed
Partnership Agreement for the obligor under such Mortgage Note, together with
copies of recorded/filed Certificates of Limited Partnership, recorded
fictitious name certificates and such other documents as Bank may require
relating to the existence and good standing of such obligor and the authority of
any person executing documents on behalf of such obligor.
15. Corporate Documents. If required by Bank, a copy of the Articles of
Incorporation of the obligor under the Mortgage Note and all amendments thereto,
together with evidence of good standing in the state of incorporation and
evidence of qualification to do business and good standing in the State of
Arizona (if Arizona is not the state of incorporation), together with proper
corporate resolutions and certificates and such other documents as Bank may
require relating to the existence and good standing of such obligor and the
authority of any person executing documents on behalf of obligor.
16. ALTA Survey. If required by Bank, with respect to loans that are not A&D
Loans, an ALTA survey showing the location of all improvements upon the premises
covered by the Mortgage and showing all easements and other matters affecting
the site. All surveys shall be certified to Borrower and its assigns and the
title company issuing the title policy required by Subparagraph 1 hereof.
17. Boundary Survey. If required by Bank, with respect to A&D Loans, a current
survey of the premises covered by the Mortgage by a licensed surveyor acceptable
to Bank describing the boundaries of the Real Property and showing all means of
ingress and egress, rights-of-way, easements (each of which shall be identified
by docket and page or recording number where recorded) and all other customary
and relevant information pursuant to ALTA standards and any title company
requirements. Following completion of the Improvements, Borrower shall furnish
to Bank an ALTA "as built" survey showing the location of the Improvements upon
the Real Property and showing all easements and other matters affecting the
site. All surveys shall be certified to Borrower and its assigns and the title
company issuing the title policy required by Subparagraph (1) hereof.
18. Soils. If required by Bank, a soils report, including drainage, boring and
compacting data, together with such hydrology and other engineering reports that
Bank may require, all of which shall be dated no earlier than sixty (60) days
prior to the date of the Term Sheet for such Mortgage Loan, shall be by
engineers acceptable to Bank and shall indicate that the condition of the
premises subject to the Mortgage is suitable for construction of the
Improvements without extraordinary land preparation. Any recommendations in the
approved soils, hydrology and other engineering reports must be complied with
and incorporated into the plans and specifications for the improvements to be
constructed on the premises.
19. Plans and Specifications. With respect to A&D Loans, the plans and
specifications for the improvements to be constructed thereunder
("Improvements").
20. Cost Breakdown. With respect to A&D Loans, a cost breakdown itemizing the
gross costs, including direct and indirect costs, for the Improvements,
certified to be correct to the best knowledge and belief of Borrower.
21. Price Contract. With respect to A&D Loans, copies of a firm and binding
maximum fixed price contract for construction of the Improvements with a
contractor that has been approved in writing by Bank.
22. Financial statements. If required by Bank, with respect to A&D Loans,
financial statements for the general contractor covering the two-year period
immediately preceding the date of this Agreement.
23. Permits. If required by Bank, with respect to A&D Loans, copies of all
grading permits and all building permits issued by the municipality having
jurisdiction over the premises and the Improvements and permitting construction
of the Improvements in accordance with the plans and specifications therefor.
24. Contractor. If required by Bank, with respect to A&D Loans, certificate of
Compliance (Good Standing) for the general contractor.
25. Job Progress Schedule. With respect to A&D Loans, a Job Progress Schedule
showing the planned timing, progress of construction and completion date for the
Improvements.
26. Worker's Compensation Insurance. With respect to A&D Loans, evidence of
worker's compensation insurance coverages satisfactory to Bank.
27. Other Documents. Such other documents and instruments as Bank may reasonably
request.
<PAGE>
EXHIBIT F
[FORM OF OFFICER'S CERTIFICATE]
TO: Bank One, Arizona, NA
Reference is hereby made to that certain Loan Agreement, dated as of
_____________________, 1995 (the "Loan Agreement"), between HOMEPLEX MORTGAGE
INVESTMENTS CORPORATION, a Maryland corporation ("Borrower") and BANK ONE,
ARIZONA, NA ("Bank"). All capitalized terms used herein and not otherwise
defined shall have the meanings given to such terms in the Loan Agreement.
Based on the financial statements delivered in connection herewith, the
following are the financial covenant ratios determined in accordance with
Section 6.7 of the Loan Agreement as of ________:
1. Net Worth Requirement
GAAP Net Worth $
----------
Less: Intangible Assets $
----------
Total Tangible Net Worth $
==========
Minimum Tangible Net Worth Required $14,500,000
==========
2. Leverage Ratio Requirements
Debt $
----------
Tangible Net Worth $
==========
Ratio of Debt to Tangible Net Worth $
----------
Maximum Ratio Permitted .75:1
-----
3. Liquid Assets
Cash $
----------
Certificates of Deposits $
----------
Marketable Securities $
----------
Unadvanced Loan Proceeds $
----------
Total Liquid Assets $
----------
Minimum Liquid Assets Required $2,000,000
In connection with the Loan Agreement, the undersigned hereby certifies
as follows:
(a) The undersigned is the _____________________ of Borrower.
(b) The undersigned has reviewed the terms of the Loan Agreement and
has made, or caused to be made under the undersigned's supervision,
a review in reasonable detail of the transactions and conditions of
Borrower during the accounting period covered by financial
statements delivered to Bank in connection with this Certificate.
(c) Such review has not disclosed the existence, during or at the end
of such accounting period, and the undersigned does not have any
knowledge of the existence as of the date hereof, of any Event of
Default or Unmatured Event of Default.
Date: _______________, _______.
HOMEPLEX MORTGAGE INVESTMENTS CORPORATION,
a Maryland corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 10,193
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,631
<CURRENT-LIABILITIES> 0
<BONDS> 9,801
<COMMON> 99
0
0
<OTHER-SE> 18,341
<TOTAL-LIABILITY-AND-EQUITY> 29,631
<SALES> 0
<TOTAL-REVENUES> 2,181
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 905
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 478
<INCOME-PRETAX> 798
<INCOME-TAX> 0
<INCOME-CONTINUING> 798
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 798
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
