SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") dated as of the first
day of September, 1995, by and between HOMEPLEX MORTGAGE INVESTMENTS
CORPORATION, a Maryland corporation ("Homeplex"), and JAY R. HOFFMAN
("Employee").
WHEREAS, Employee is an employee of Homeplex on an at will
basis;
WHEREAS, if a Change in Control (as defined below) occurs
Employee may be terminated;
WHEREAS, Homeplex desires to continue to have the benefits of
Employee's knowledge and experience and considers his continued employment an
important element in protecting and enhancing the best interests of Homeplex and
its stockholders;
NOW, THEREFORE, in consideration of the promises and of the
mutual covenants herein contained, the parties hereto have agreed and do agree
as follows:
1. Employment. Employee shall continue to be an at will
employee of Homeplex.
2. Term of Employment. The term of this Agreement shall be for
a period on one year commencing as of the date hereof and ending on August 30,
1996.
3. Change in Control. The term "Change in Control" of Homeplex
shall mean a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 as in effect on the date of this Agreement or,
if Item 6(e) is no longer in effect, any regulations issued by the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934 which
serve similar purposes; provided that, without limitation, such a Change in
Control shall be deemed to have occurred if and when (i) any person (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) directly or indirectly of equity securities of
Homeplex representing 9.8% or more of the combined voting power of Homeplex's
then outstanding equity securities except that this provision shall not apply to
an acquisition which has been approved by at least 75% of the members of the
Board of Directors who are not affiliates or associates of such person and by at
least 80% of the issued and outstanding shares of Homeplex common stock
beneficially owned by non-affiliates of such person; (ii) during the period of
this Agreement, individuals who, at the beginning of such period, constituted
the Board of Directors of Homeplex, cease for any reason to constitute at least
a majority thereof unless the election or nomination for election of each new
director was approved by the unanimous vote of the directors who were directors
at the beginning of the period; (iii) a tender offer or exchange offer is made
whereby the effect of such offer is to take over and control Homeplex; and such
offer is consummated for the equity securities of Homeplex representing 20% or
more of the combined voting power of Homeplex's then outstanding voting
securities; (iv) Homeplex is merged, consolidated or
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enters into a reorganization transaction with another person and as the result
of such merger, consolidation or reorganization less than 75% of the outstanding
equity securities of the surviving or resulting person shall then be owned in
the aggregate by the former stockholders of Homeplex; or (v) Homeplex transfers
substantially all of its assets to another person or entity which is not a
wholly-owned subsidiary of Homeplex. The term "Approved Change in Control" shall
be a Change in Control that has been approved by the Board of Directors by
written notice to the Employee prior to the Change in Control.
4. Effect of Change in Control.
(a) Severance Bonus. If during the term of this
Agreement a Change in Control has occurred, Employee shall be entitled to
receive a severance bonus in an amount equal to the Employee's annual salary as
of the date of the Change in Control (the "Severance Bonus"). Except as provided
in Section 4(b) hereof, the Severance Bonus shall be payable within 10 days
after the Change in Control.
(b) Approved Change in Control. Notwithstanding
Section 4(a) hereof, if the Change in Control is an Approved Change in Control
and if Employee continues his employment with Homeplex after the Change in
Control at an annual salary at least equal to Employee's annual salary before
the Change in Control, the Severance Bonus shall be payable in four installments
with the first installment commencing on the 90th day after the Change in
Control and each successive installment occurring every 90 days thereafter.
Notwithstanding the foregoing, the Severance Bonus shall be accelerated and paid
immediately upon the termination of the Employee by Homeplex for any reason
other than for Cause or upon a reduction in Employee's salary. If the Employee
is terminated for Cause or voluntarily terminates his own employment, Homeplex
shall not be required to pay any portion of the Severance Bonus unpaid as of the
date of termination. For purposes of this Agreement, "Cause" shall mean (i) the
willful and continued failure by Employee to substantially perform his duties
hereunder, after written demand for substantial performance is delivered by
Homeplex specifically identifying the manner in which Homeplex believes Employee
has not substantially performed, or (ii) Employee's willful misconduct which
materially injuries Homeplex, monetarily or otherwise. For purposes of this
Section 4(b), no explicit act, or failure to act, on Employee's part shall be
considered willful if done, or omitted to be done, in good faith and with a
reasonable belief that the action or omission was in the best interests of
Homeplex. Notwithstanding the foregoing, cause shall not be deemed to exist
unless Homeplex has given written notice to Employee setting forth Homeplex's
intention to terminate Employee and the deficiencies in Employee's performance
which establish the cause for Employee's termination. Employee in such period
shall have the right to correct any such deficiencies in performance. The date
of termination shall be 30 days after written notice of intent to terminate
unless the deficiencies in performance are corrected by Employee during such 30
day period. If the deficiencies in performance are timely corrected, Employee
may not be terminated.
(c) Bonus not in Lieu of Salary. In the event that
Employee continues his employment with Homeplex after a Change in Control, the
Severance Bonus (whether payable pursuant to Sections 4(a) or (b)) shall be paid
in addition to the Employee's regular compensation.
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5. Surrender of Books and Records. Employee acknowledges that
all files, lists, books, records, literature, products and any other materials
owned by Homeplex or used by it in connection with the conduct of its business
shall at all times remain the property of Homeplex and that upon termination of
employment hereunder, irrespective of the time, manner or cause of said
termination, Employee will surrender to Homeplex all such files, lists, books,
records, literature, products and other materials.
6. Notices. All notices, requests, demands and other
communications required under this Agreement shall be in writing and shall be
deemed duly given and received (i) if personally delivered, on the date of
delivery, (ii) if mailed, three (3) days after deposit in the United States
mail, registered or certified, return receipt requested, postage prepaid and
addressed as provided below, or (iii) if by a courier delivery service providing
overnight or "next-day" delivery, on the next business day after deposit with
such service addressed as follows:
If to Homeplex: Homeplex Mortgage Investments
Corporation
5333 N. 7th Street, Suite 219
Phoenix, Arizona 85014
If the Employee: Jay R. Hoffman
8606 East Larkspur Drive
Scottsdale, Arizona 85260
Any party may change its above-designated address by giving the other party
written notice of such change in the manner set forth herein.
7. Waiver. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver, and no waiver shall be binding unless executed in writing by the party
making the waiver.
8. Integration, Modification and Amendment. This Agreement
embodies the full understanding of the parties with respect to all severance
matters, superseding any and all prior agreements, and no amendment or
modification thereof shall be effective unless the same shall be in writing and
signed by both of said parties. This Agreement does not confer any employment
rights upon Employee beyond those rights which may currently exist as the result
of Employee's at will employment relationship with Homeplex.
9. Governing Law. Except as the corporate law of the State of
Maryland expressly applies hereto, this Agreement shall be construed in
accordance with, and governed by, the laws of the State of Arizona, without
regard to application of conflicts of law principles.
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10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which,
taken together, shall constitute one and the same instrument.
11. Severability. Each provision of this Agreement is
severable from every other provision and is enforceable to the full extent that
it is valid without regard to the invalidity of any portion hereof or of any
other provision and without regard to any claim or cause of action Employee may
have against Homeplex under this Agreement or otherwise.
12. Successors And Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties hereto;
provided that because the obligations of Employee hereunder involve the
performance of personal services, such obligations shall not be delegated by
Employee. For purposes of this Agreement successors and assigns shall include,
but not be limited to, any individual, corporation, trust, partnership, or other
entity which acquires a majority of the stock or assets of Homeplex by sale,
merger, consolidation, liquidation, or other form of transfer. Homeplex will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of Homeplex to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that Homeplex would be required to
perform it if no such succession had taken place.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
HOMEPLEX MORTGAGE INVESTMENTS
CORPORATION, a Maryland corporation
By: _______________________________________
Name: _____________________________________
Its: ______________________________________
EMPLOYEE:
___________________________________________
Jay R. Hoffman
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