Escrow And Contingent Stock Agreement

ESCROW AND CONTINGENT STOCK AGREEMENT
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THIS ESCROW AND CONTINGENT STOCK AGREEMENT (the "Agreement") is made as of December 31, 1996, by and among Homeplex Mortgage Investments Corporation, a Maryland corporation ("HPX") and William W. Cleverly and Steven J. Hilton (the "Monterey Shareholders").


RECITALS


WHEREAS, HPX and the Monterey Shareholders are parties to that certain Agreement and Plan of Reorganization dated September 13, 1996 (the "Merger Agreement");


WHEREAS, pursuant to the Merger Agreement, HPX has agreed to assume the obligations of Monterey Homes Construction II, Inc. and Monterey Homes Arizona II, Inc. under that certain Warrant Agreement dated October 17, 1994 (the "Warrant Agreement");


WHEREAS, this Agreement is being entered into pursuant to the Merger Agreement and establishes the terms and conditions of the deposit and disbursement of 643,500 shares of HPX Common Stock (the "Warrant Stock") issued in the names of the Monterey Shareholders upon the exercise or expiration of the Warrants (as defined in Section 1.3(e) of the Merger Agreement); and


WHEREAS, this Agreement is being entered into pursuant to the Merger Agreement and establishes the terms and conditions of the issuance of an additional 668,160 shares of HPX Common Stock (the "Contingent Stock") to the Monterey Shareholders and an additional 131,840 of HPX Common Stock (the "Contingent Warrant Stock") reserved for issuance upon the exercise or expiration of the Warrants (as defined in Section 1.3(e) of the Merger Agreement;


NOW THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:


1. Capitalized Terms. Unless otherwise defined, capitalized terms used in this Agreement shall have the same meaning ascribed to such terms in the Merger Agreement.


2. Appointment. The Monterey Shareholders hereby appoint HPX as the escrow agent
1 with respect to the Warrant Stock under this Agreement, and HPX hereby agrees to accept such appointment.


3. Resignation and Substitution. HPX may resign as escrow agent at any time by giving notice of such resignation to the Monterey Shareholders specifying a date when such resignation shall take effect; provided, however, that HPX shall continue to serve until its successor accepts the Warrant Stock and receives the Warrant Stock in accordance with the following provisions: Upon notice of termination, a successor escrow agent shall be appointed by the Monterey Shareholders.


4. Deposit of Warrant Stock. The Monterey Shareholders hereby deliver the Warrant Stock to HPX to be held in escrow for the benefit of the Monterey Shareholders and Monterey Warrantholders, and such escrow shall be governed by the terms set forth herein. HPX hereby acknowledges receipt of the Warrant Stock which shall be reasonably acceptable to HPX.


5. Exercise or Expiration of Warrants.


a. Upon the exercise, in whole or in part, of a Warrant by a
Warrantholder in accordance with the terms of the Warrant Agreement,
HPX shall (i) deliver to such Warrantholder a number of shares of
Warrant Stock allocable to the Warrantholder on a pro rata basis to the
Warrant exercised; (ii) issue and deliver a number of shares of
Contingent Warrant Stock allocable to the Warrantholder on a pro rata
basis to the Warrant exercised; and (iii) pay to the Monterey
Shareholders an amount in cash equal to the aggregate price paid by the
Warrantholder to exercise the Warrant.


b. If any Warrants are not exercised and thus expire on
October 15, 2001, HPX shall (i) deliver to each of the Monterey
Shareholders one-half of any shares of Warrant Stock then held in
escrow by HPX and (ii) issue and deliver to each of the Monterey
Shareholders one-half of any shares of Contingent Warrant Stock that
have not been issued hereunder.


c. Shares of Contingent Warrant Stock issued to Warrantholders
or the Monterey Shareholders pursuant to this Section 5 shall be issued
and delivered without regard to the stock price targets and other
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