As used in this Prospectus, the capitalized and other terms listed below
have the meanings indicated.
"Agency" means FNMA, FHLMC or GNMA.
"Agency Certificates" means Pass-Through Certificates guaranteed by FNMA,
FHLMC or GNMA.
"ARM" means a Mortgage Loan, or any Mortgage Loan underlying a Mortgage
Security, that features adjustments of the underlying interest rate at
predetermined times based on an agreed margin to an established index. An ARM is
usually subject to periodic interest rate and/or payment caps and a lifetime
interest rate cap.
"Average Net Worth" means the arithmetic average of the sum of the gross
proceeds from any sale of equity securities by the Company, before deducting any
underwriting discounts and commissions and other expenses and costs relating to
the Offering, plus the Company's retained earnings (without taking into account
any losses incurred in prior periods) computed by taking the daily average of
such values during such period.
"Bankruptcy Code" means Title 11, United States Code, as amended.
"CAG" means the Company's capital allocation guidelines.
"CMO" means an adjustable or fixed-rate debt obligation (bond) that is
collateralized by Mortgage Loans or mortgage certificates and issued by private
institutions or issued or guaranteed by FNMA, FHLMC or GNMA.
"CMT Index" means constant maturity Treasury index.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Company" means either (i) HCHI or (ii) HCHI, HCP, HCMC and HCS
collectively, as the context may require.
"Commercial Mortgage Assets" means Commercial Mortgage Loans and Commercial
"Commercial Mortgage Loans" means Mortgage Loans secured by commercial
"Commercial Mortgage Securities" means Mortgage Securities representing an
interest in, or secured by, Commercial Mortgage Loans.
"Due Diligence Operations" means the due diligence operations conducted by
"Earn-Out" means 216,667 additional shares of Common Stock that will be
issued to the Principals if (i) as of any Earn-Out Measuring Date, the return on
a Unit is at least equal to the initial public offering price of the Unit or
(ii) as of any three Earn-Out Measuring Dates, the total return on a Unit is at
least equal to a 20% annualized return on the public offering price of the Unit.
One-third of the Earn-Out will vest as of any Earn-Out Measuring Date through
which the return on a Unit is at least equal to a 20% annualized return on the
initial public offering price of the Unit. The return on a Unit is determined by
adding (a) the appreciation in the value of the Unit since the closing of the
Offering and (b) the amount of distributions made by the Company on the share of
Common Stock included in the Unit since the closing of the Offering. The
appreciation in the value of a Unit as of any Earn-Out Measuring Date is two
times the average difference, during the 30 day period that ends on the Earn-Out
Measuring Date, between the market price of the share of Common Stock included
in the Unit and the initial public offering price of the Unit.
"Earn-Out Measuring Date" means each September 30, beginning with September
30, 1998 and ending with September 30, 2002.
"ERISA" means the Employee Retirement Income Security Act of 1974.