STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is dated as of
December 31, 1996 (the "Effective Date") between Homeplex Mortgage Investments
Corporation, a Maryland corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx
("Optionee").
WHEREAS, the Company desires to obtain the services of the
Optionee, and the Optionee has agreed to provide services to the Company;
WHEREAS, the Company desires to compensate the Optionee for such
services by granting the Optionee an option (the "Option") to purchase shares of
the Company's common stock, $.01 par value per share (the "Common Stock"),
subject to the terms and conditions of this Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee, on
the terms and subject to the conditions, limitations and restrictions set forth
in this Agreement, an Option to purchase 500,000 shares of Common Stock at an
exercise price of $1.75 per share of Common Stock.
2. Exercise Period, Vesting and Amount. The Option shall be
exercisable ratably in equal annual increments over three years commencing on
the first anniversary of the Effective Date; provided, however, that the Option
shall become exerciseable in full if
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there is a change of control of the Company required to be reported in response
to Item 1 of Form 8-K under the Securities Exchange Act of 1934 as in effect on
the date of this Agreement (or any similar or successor form or provisions) on
or prior to the third anniversary of the Effective Date. The Option shall expire
and become null and void after December 31, 2002.
3. Exercise. In order to exercise the Option, the Optionee must
provide written notice (the "Exercise Notice") to the Company at its principal
executive office stating the number of shares in respect of which the Option is
being exercised. The Exercise Notice must be signed by the Optionee and must
include his complete address and social security number. At the time of
exercise, the Optionee must pay to the Company the applicable exercise price per
share times the number of shares as to which the Option is being exercised,
payable (a) by cash or cash equivalent or (b) at the Company's option, by the
delivery of shares of Common Stock having a Fair Market Value (defined below) on
the date immediately preceding the exercise date equal to the aggregate exercise
price, which may include shares subject to the Option. If the Option is
exercised in full, the Optionee will surrender this Agreement to the Company for
cancellation. If the Option is exercised in part, the Optionee will surrender
this Agreement to the Company so that the Company may make appropriate notation
hereon or cancel this Agreement and issue a new agreement (containing the same
terms and conditions set forth herein) representing the unexercised portion of
the Option. For these purposes, "Fair Market Value" means (i) the average
closing price on the
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New York Stock Exchange or any other exchange or market system on which the
Common Stock is primarily traded for the last five trading days ending on the
date immediately preceding the exercise date; or (ii) if there is no reported
price information for the Common Stock, the fair market value as determined in
good faith by the Company's Board of Directors.
4. Tax Withholding. Any provision of this Agreement to the
contrary notwithstanding, the Company may take such steps as it deems necessary
or desirable for the withholding of any taxes that it is required by law or
regulation of any governmental authority, federal, state or local, domestic or
foreign, to withhold in connection with any of the shares of Common Stock
subject hereto, including requiring the Optionee to pay to the Company the
amount of such withholding tax before the Company issues any shares pursuant to
the exercise of the Option.
5. Dilution. If the number of shares of Common Stock outstanding
is changed by reason of a stock dividend, stock split, reclassification or
combination of shares, the number of shares of Common Stock then issuable upon
exercise of the Option and the exercise price per share will be appropriately
adjusted. In the event of any merger, consolidation, reorganization, or
recapitalization of the Company pursuant to which holders of the Common Stock
receive securities, other assets or cash (a "Reorganization Transaction"), then
upon any subsequent exercise of the Option, the Optionee will be entitled
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to receive, for each share of Common Stock issuable upon exercise of the Option,
the number and kind of securities, other assets or cash received in respect of
one share of Common Stock as a result of such Reorganization Transaction.
6. Termination.
(a) If the Company discharges Optionee for Cause (as defined
below), then the Option will terminate immediately. For purposes of
this Agreement, "Cause" is defined to mean only an act or acts of
dishonesty by Optionee constituting a felony and resulting or intended
to result directly or indirectly in substantial personal gain or
enrichment at the expense of the Company. Notwithstanding the
foregoing, Optionee shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to Optionee a
copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Company's Board of
Directors (excluding Optionee if he is then a director) at a meeting of
the Board called and held for the purpose (after reasonable notice to
Optionee and an opportunity for Optionee, together with his counsel, to
be heard before the Board), finding that in the good faith opinion of
the Board Optionee was guilty of conduct meeting the criteria set forth
above and specifying the particulars thereof.
(b) If Optionee voluntarily terminates his employment with
the Company
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or if Optionee's employment with the Company is terminated as a result
of Optionee's death or Permanent Disability (as defined below), then
the Option will be exercisable for six months following such
termination in the event of voluntary termination and one year
following such termination in the case of death or Permanent
Disability, but only in any such case to the extent that the Option was
exercisable on the date of termination. For purposes hereof, "Permanent
Disability" means a disability that results or, in the judgment of a
physician mutually agreeable to the Company and Optionee, is likely to
result in Optionee being unable to fulfill his duties for 180
consecutive days.
(c) If Optionee's employment with the Company is
terminated by the Company without Cause, the Option will be immediately
exercisable for the aggregate number of Option Shares not previously
exercised and issued pursuant to this Agreement until December 31,
2002;
(d) For purposes of Section 6(a) or 6(b) hereof, any
termination by the Company for Cause or Permanent Disability shall be
communicated by written Notice of Termination complying with Section
8(c) of Optionee's Employment Agreement with the Company dated the date
hereof.
7. Transfer of Option. The Optionee shall not, directly or
indirectly, sell, pledge or otherwise transfer ("Transfer") any unexercised
portion of the Option or the rights
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and privileges pertaining thereto, other than pursuant to a qualified domestic
relations order. Neither the Option nor the underlying shares of Common Stock is
liable for or subject to, in whole or in part, the debts, contracts, liabilities
or torts of the Optionee, nor will they be subject to garnishment, attachment,
execution, levy or other legal or equitable process, other than pursuant to a
qualified domestic relations order.
8. Certain Legal Requirements. The Company will register or
qualify the Optionee's shares of Common Stock under the Securities Act of 1933
and applicable blue sky or state securities laws, and will cause such shares to
be listed on any exchange or trading system upon which the Company's Common
Stock is listed.
9. Arbitration. All disputes, claims and other matters in
controversy arising directly or indirectly out of or related to this Agreement,
or the breach thereof, whether contractual or non-contractual, shall be
determined by arbitration and shall be settled by three arbitrators, one of whom
shall be appointed by the Company, one by the Employee and the third of whom
shall be appointed by the first two arbitrators. Persons eligible to be selected
as arbitrators shall be limited to attorneys who have been in practice at least
15 years specializing in employment law matters and who have had both training
and experience as arbitrators ("Experienced Arbitrators"). If either such person
fails to appoint an arbitrator within ten (10) days of a request in writing by
the other such person to do so or if the first two arbitrators cannot agree on
the appointment of a third arbitrator within thirty days, then such arbitrator
shall be appointed by the American Arbitration Association (which
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appointment shall not be limited to Experienced Arbitrators if not made within
the applicable time period). Except as to the selection of arbitrators which
shall be as set forth above, the arbitration shall be conducted promptly and
expeditiously at such place in Phoenix, Arizona agreed to between the Company
and the Optionee in accordance with the Commercial Rules of Arbitration of the
American Arbitration Association then in effect so as to enable the arbitrators
to resolve the disputes, claims and other matters in controversy within
forty-five (45) days of the commencement of the arbitration proceedings. The
arbitrators shall base their award on applicable law and judicial precedent and,
unless both parties agree otherwise, shall include in such award the findings of
fact and conclusions of law upon which the award is based and may award
temporary or permanent equitable relief. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The
arbitrators' resolution of the dispute shall be final, binding and
non-appealable. The nonprevailing party shall bear the expenses of the
arbitrators and the arbitration, including reasonable attorneys' fees and costs.
10. Miscellaneous.
(a) The Option is intended to be a non-qualified stock
option under applicable tax laws, and it is not to be characterized or
treated as an incentive stock option under Section 422 of the Internal
Revenue Code of 1986.
(b) Neither the Optionee nor any person claiming under or
through the
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Optionee will have any of the rights or privileges of a shareholder of
the Company in respect of any of the shares issuable upon exercise of
the Option unless and until certificates representing such shares have
been issued and delivered, provided that the Company shall ensure that
certificates representing shares validly purchased hereunder shall be
issued and delivered promptly to the Optionee or person validly
claiming under or through Optionee.
(c) All notices and other communications hereunder must be
in writing and will be deemed to have been duly given when delivered or
mailed in accordance with the provisions of Section_14 of Optionee's
Employment Agreement with the Company dated the date hereof.
(d) Subject to the limitations in this Agreement on the
transferability by the Optionee of the Option and any shares of Common
Stock, this Agreement will be binding on and inure to the benefit of
the successors and assigns of the parties hereto.
(e) If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any applicable law, then such
provision will be deemed to be modified to the minimum extent necessary
to render it legal, valid and enforceable, and if no such modification
will render it legal, valid and enforceable, then this Agreement will
be construed as if not containing the provision held to be invalid, and
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the rights and obligations of the parties will be construed and
enforced accordingly.
(f) The parties acknowledge and agree that any violation
of the terms of this Agreement would cause irreparable harm to the
other party and that, in addition to all other rights or remedies
available at law or in equity, such party will be entitled to
injunctive and other equitable relief to prevent or enjoin any such
violation.
(g) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE
STATE OF ARIZONA.
(h) This Agreement may be executed in any number of
counterparts, and all such counterparts will be deemed an original,
will be construed together and will constitute one and the same
instrument.
(i) This Agreement embodies the complete agreement and
understanding among the parties with respect to the subject matter
hereof and supersedes and preempts any prior written, or prior or
contemporaneous oral, understandings, agreements or representations by
or among any of the parties that may have related to the subject matter
hereof in any way.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
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HOMEPLEX
MORTGAGE INVESTMENTS
CORPORATION
By: /s/ Xxx X. Xxxxxxx
.........................................
Name: Xxx X. Xxxxxxx
Title: President
OPTIONEE
/s/ Xxxxxxx X. Xxxxxxxx
.............................................
Xxxxxxx X. Xxxxxxxx
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