REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated
December 31, 1996, is made by and between Homeplex Mortgage Investments
Corporation, a Maryland corporation (the "Company"), and Steven J. Hilton (the
"Holder").
The Company and the Holder agree as follows:
1. Shares. As used herein, the term "Shares" shall mean the
shares of common stock, $.01 par value, of the Company, acquired by the Holder
pursuant to that certain Agreement and Plan of Reorganization (the "Merger
Agreement") among the Company, Monterey Homes Construction II, Inc.; Monterey
Homes Arizona II, Inc. and the Monterey Shareholders (as defined therein) dated
September 13, 1996 (including the Contingent Stock (as defined in the Merger
Agreement) and underlying that certain Stock Option Agreement by and between the
Company and the Holder dated December 31, 1996 (the "Option Shares") and any
securities issued to Holder as a dividend or distribution in respect of or in
exchange for such shares, whether by reclassification, stock split, reverse
stock split or otherwise) until their sale under this Agreement or in accordance
with Rule 144 (or any similar provision then in force) under the Securities Act
of 1933, as amended (the "Securities Act").
2. Demand Registration. (a) Subject to the provisions of
Section 2(b) hereof, the Holder may at any time after the first anniversary of
the date of this Agreement
1
make up to two written requests to the Company for registration under Form S-3
(or such other appropriate or successor form if Form S-3 is not available) and
in accordance with the provisions of Rule 415 promulgated under the Securities
Act of all or a portion of his Shares. The Company shall prepare and file with
the Securities and Exchange Commission (the "SEC") a registration statement on
Form S-3 (or such other appropriate or successor form if Form S-3 is not
available) under the Securities Act covering such Shares, shall use its best
efforts to cause such registration statement to become effective within ninety
(90) days of the Holder's request and shall file such post-effective amendments
to such registration statement in order for it to remain effective without lapse
until the sale of all the Shares and shall qualify such offering under
applicable blue sky or state securities laws.
(b) Notwithstanding delivery of any written request
referred to in Section 2(a), the Company will have the prior right at any time
to conduct public offerings of its common stock for its corporate purposes and
may preempt any pending demand registration, in which case Section 3 will apply
to the offering. Under these circumstances, the Company will not be obligated to
effect the requested demand registration under this Section 2 and such
previously requested registration will not count as a demand registration under
Section 2(a). In addition, if, prior to the time a written request is delivered
under Section 2(a), the Company has given written notice pursuant to Section
3(a) of its intention to file a registration statement, the Company shall not be
obligated to cause the requested demand registration to become effective until
120 days after the effective date of such
2
registration statement or until the Company ceases to diligently pursue the
preparation, filing and effectiveness of such registration statement.
(c) The Company shall file a registration statement
on Form S-8 with respect to the Option Shares promptly after the date hereof and
shall use its best efforts to cause such registration statement to remain
effective until the related stock options have been exercised or expired.
(d) The Company shall pay the expenses described in
Section 6 for the registration pursuant to this Section 2.
3. Incidental Registration Rights. (a) If at any time the
Company shall determine to proceed with the preparation and filling of a
registration statement under the Securities Act in connection with the proposed
offer and sale of any of its securities by it or any of its security holders
(other than a registration statement on Form S-4, S-8 or other limited purpose
form), the Company will give written notice of its determination to the Holder.
Upon the written request from the Holder, within ten (10) days after receipt of
any such notice from the Company, the Company will, subject to the provisions of
Section 3(b), include all Shares requested by the Holder in such registration
statement (and any related qualification under blue sky or state securities
laws); provided, however, that nothing herein shall prevent the Company from, at
any time, abandoning or delaying any registration under this Section 3. If any
registration pursuant to this Section 3 shall be underwritten in whole or in
part, the Company shall require that the Shares requested for inclusion pursuant
to this
3
Section 3 be included in the underwriting on the same terms and conditions,
including lock-up provisions, as the securities otherwise being sold through the
underwriters.
(b) Notwithstanding the foregoing, if the managing
underwriter determines and advises that the inclusion of the Shares proposed to
be included in the underwritten public offering, together with any other issued
and outstanding securities proposed to be included therein by holders of
securities other than the Holder who have registration rights which are pari
passu to the Holder, would interfere with the successful marketing of such
securities, then the number of such Shares that the managing underwriter
believes may be sold in such underwritten public offering shall be allocated for
inclusion in the registration statement in the following order of priority: (i)
first, the securities being offered by the Company, and (ii) secondly, the
number of Shares then owned by the Holder and other holders entitled to
participate therein who have registration rights which are pari passu to the
Holder on a pro rata basis or such other basis as they shall have agreed.
(c) The Company shall pay the expenses described in
Section 6 for registration statements filed pursuant to this Section 3.
4. Registration Procedures. If and whenever the Company is
required by the provisions of Section 2 or 3 to effect the registration of
Shares under the Securities Act, the Company will:
(a) prepare and file with the SEC a registration
statement with respect to such securities, and use its best efforts to cause
such registration statement to
4
become and remain effective for such period as may be reasonably necessary to
effect the sale of such securities (the "Effective Period").
(b) prepare and file with the SEC such amendments to
such registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective for the
Effective Period as may be reasonably necessary to effect the sale of such
securities.
(c) furnish to the Holder and to the underwriters for
the securities being registered, such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such other
documents as the Holder and such underwriters may reasonably request in order to
facilitate the public offering of such securities.
(d) use its best efforts to register or qualify the
Shares covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as the Holder may reasonably request in
writing within ten (10) days following the original filing of such registration
statement, except that the Company shall not for any purpose be required to
execute a general consent to service of process or to qualify to do business as
a foreign corporation in any jurisdiction wherein it is not so qualified or
subject itself to taxation in a jurisdiction where it had not previously been
subject to taxation, or take any other action that would subject the Company to
service of process in a lawsuit other than one arising out of the registration
of the Shares.
(e) notify the Holder, promptly after it shall
receive notice thereof,
5
of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed.
(f) notify the Holder promptly of any request by the
SEC for the amending or supplementing of such registration statement or
prospectus or for additional information.
(g) prepare and promptly file with the SEC and
promptly notify the Holder of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at any time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event shall
have occurred as the result of which any such prospectus or any other prospectus
as then in effect would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading; and
(h) advise the Holder, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
5. Underwriting. The Holder agrees that any demand
registration involving the issuance of Common Stock by the Company will, at the
Company's option,
6
be effected pursuant to an underwritten public offering. The Holder will select
the book-running managing underwriter and any additional investment bankers and
managers to be used in connection with the demand registration, provided that
such underwriter and additional investment bankers and managers are reasonably
acceptable to the Company and that the underwriting discounts, fees, discounts
and any other compensation proposed to be charged by such persons is competitive
with that obtainable from other underwriters, bankers and managers of comparable
quality and reputation. The Holder may not participate in an incidental
registration hereunder unless such Holder (a) agrees to sell the Shares on the
basis provided in the underwriting arrangements, if any, and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, if any, and these registration rights.
6. Expenses. (a) With respect to any registration requested
pursuant to Section 2 hereof, and with respect to an inclusion of Shares in a
registration statement pursuant to Section 3 hereof, all fees, costs and
expenses of such registration, inclusion and public offering (as further
specified in paragraph (b) below) shall be borne by the Company; provided,
however, that the Holder shall bear the underwriting discounts and commissions
and transfer taxes in respect of the sale of his Shares.
(b) The fees, costs and expenses of registration to
be borne by the Company as provided in Section 6(a) above shall include, without
limitation, all registration,
7
filing, and NASD fees, printing expenses, fees and disbursements of legal
counsel and accountants for the Company and all legal fees and disbursements and
other expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered and
qualified.
7. Indemnification. (a) The Company will indemnify and hold
harmless the Holder and any underwriter (as defined in the Securities Act) for
the Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act, from and against and will reimburse
the Holder and each such underwriter and controlling person with respect to, any
and all loss, damage, liability, cost and expense to which the Holder or any
such underwriter or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus contained
therein or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expenses arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished in writing by the Holder, such
underwriter or such controlling person
8
specifically for use in the preparation thereof. The Company will not be subject
to any liability for any settlement made without its consent, which consent
shall not be unreasonably withheld.
(b) The Holder will indemnify and hold harmless the
Company, its directors and officers, any controlling person and any underwriter
thereof from and against, and will reimburse the Company, its directors and
officers, any controlling person and any underwriter thereof with respect to,
any and all loss, damage, liability, cost or expense to which the Company or any
controlling person and/or any underwriter thereof may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities, cost
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance upon
and in conformity with information furnished in writing by or on behalf of the
Holder specifically for use in the preparation thereof. The Holder will not be
subject to any liability for any settlement made without its consent, which
consent shall not be unreasonably withheld.
9
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this Section 6 of notice
of the commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), promptly notify the indemnifying party of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than
hereunder, except to the extent that such omission materially and adversely
affects the indemnifying party's ability to defend against or compromise such
claim. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party;
provided, however, that if the defendants in any action include both the
indemnified party and the indemnifying party and there are legal defenses
available to the indemnified party and/or other indemnified parties which are
different from or in addition to those available to the indemnifying party, or
if there is a conflict of interest which would prevent counsel for the
indemnifying party from also representing the indemnified party, the indemnified
party or parties shall have the right to select separate counsel to participate
in the defense of such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to an indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be liable to
such indemnified
10
party pursuant to the provisions of said paragraph (a) or (b) for any legal or
other expense subsequently incurred by such indemnified party in connection with
the defense thereof other than costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the provisions
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after the notice of the commencement of the action or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
(d) If for any reason the foregoing indemnification
is unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and the indemnified party on the other in
connection with the statement or omission which resulted in the losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentations (within the
meaning of Section_11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Miscellaneous.
11
(a) Notices. Any notice or other communications
required or which may be given hereunder shall be in writing and shall be
delivered personally, or telegraphed, telexed or telecopied, or sent by
certified, registered or express mail postage prepaid, and shall be given when
so delivered personally, or telegraphed, telexed or telecopied, or if mailed,
two days after mailing, as follows (or to such other address as any party may
from time to time specify in writing pursuant to the notice provisions hereof):
If to the Company:
Homeplex Mortgage Investments Corporation
5333 North Seventh Street, Suite 219
Phoenix, Arizona 85014
Fax: (602) 230-1690
Attention: Corporate Secretary
If to the Holder:
Steven J. Hilton
5265 N. Wilkinson
Paradise Valley, Arizona 85253
(b) Entire Agreement. This Agreement contains the
entire agreement between the Company and the Holder, in respect of the subject
matter hereof, and supersedes all prior agreements, written or oral, with
respect thereto.
(c) Amendment. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and any term or condition
hereof may be
12
waived, only by a written instrument executed by the Company and the Holder, in
the case of a waiver, by the party waiving compliance. No delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor 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 hereunder. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies that any party may otherwise have at law or in equity.
(d) Governing Law. This Agreement is made in, and
shall be governed by and construed in accordance with, the laws of the State of
Arizona, without giving effect to the provisions thereof pertaining to conflicts
and choices of law.
(e) Successors and Assigns. This agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties; notwithstanding the foregoing, neither party shall assign its
rights, duties or obligations under this Agreement to any other person, without
the other party's express written consent, except that the Holder may assign the
benefits of this Agreement to any member of the Holder's "immediate family" as
such term is defined in Rule 16a-1(e) or any trust, partnership or other entity
created for the benefit of such persons or to any other transferee of more than
150,000 shares prior to giving effect to the contemplated reverse stock split of
the Company as set forth in the Merger Agreement.
13
(f) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
HOMEPLEX MORTGAGE
INVESTMENTS CORPORATION
By: /s/ Jay R. Hoffman
......................................
Name: Jay R. Hoffman
Title: President
HOLDER
/s/ Steven J. Hilton
.........................................
Steven J. Hilton
15