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EXHIBIT 1
STOCK OPTION AGREEMENT
1. Identification.
This Stock Option Agreement (the "Option Agreement"), dated for
identification purposes April 14, 1995 is made and entered into by and between
MAE GP Corporation, a Delaware corporation ("MAE GP") and Angeles Mortgage
Investment Trust, a California business trust ("AMIT").
2. Recitals.
2.1 AMIT and Insignia Financial Group, Inc., a Delaware
corporation ("Insignia") and others, including affiliates of MAE GP, are
parties to a lawsuit captioned Angeles Mortgage Investment Trust, et al. v.
Insignia Financial Group, Inc., et al., Case No. BC 085673, now pending in the
Superior Court of the State of California for the County of Los Angeles (the
"Action").
2.2 MAE GP is an affiliate of certain of the defendants named in
the Action.
2.3 In order to settle certain claims alleged in or related to the
Action, AMIT, MAE GP, Insignia and certain other parties related to Insignia
are entering into that certain Settlement Agreement dated November 9, 1994 (the
"Settlement Agreement"), which provides, among other things, that MAE GP shall
xxxxx XXXX an option to purchase any and all AMIT Class B Shares (the
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"Shares") now owned or hereafter acquired by MAE GP on or before that date
which is ten (10) years after the "Effective Date" (as such term is defined in
the Settlement Agreement).
2.4 MAE GP desires to grant to AMIT, and AMIT desires to accept,
an option to purchase the Shares, on the terms and conditions set forth below.
3. Grant of Option.
3.1 MAE GP hereby grants to AMIT an option (the "Option") to
purchase the Shares, on that date which is ten (10) years from the Effective
Date (the "Option Exercise Date"), for a purchase price equal to (i)
Ninety-Three Thousand Eight Hundred Fifty-Six Dollars ($93,856), plus (ii) any
amounts paid by MAE GP (the "Acquisition Costs") to purchase AMIT Class B
Shares (the "Additional Shares"), in addition to the One Million Six Hundred
Seventy-Five Thousand One Hundred Thirteen (1,675,113) AMIT Class B Shares
currently owned by MAE GP (the "Initial Shares"), plus (iii) interest on the
Acquisition Costs at an annual rate equal to six and one-half percent (6 1/2%),
which interest shall commence to accrue as of the date MAE GP acquires any such
Additional Shares (collectively, the "Purchase Price").
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3.2 In consideration for MAE GP's grant of the Option, AMIT shall
pay to MAE GP Two Hundred Fifty Thousand Dollars ($250,000), in cash or by
certified or bank cashier's check, concurrently with the execution of this
Option Agreement.
4. Exercise Of Option.
4.1 Unless the Additional Shares are acquired from AMIT, MAE GP
shall deliver written notice to AMIT following MAE GP's acquisition of
Additional Shares any time prior to the Option Exercise Date, which notice
shall be delivered within fifteen (15) business days of such acquisition, and
which notice shall specify the date of acquisition of the Additional Shares,
the number of Additional Shares which MAE GP acquired, the Acquisition Costs
for the Additional Shares, and the total number of Shares owned by MAE GP
following such acquisition.
4.2 If AMIT desires to exercise the Option, it shall do so by
delivery of written notice thereof (the "Option Notice") to MAE GP on or before
that date which is thirty (30) days prior to the Option Exercise Date, which
notice shall specify the date on which the purchase and sale shall occur, which
date shall be on or after the Option Exercise Date, but in no event later than
thirty (30) days following the Option Exercise Date (the "Closing Date").
4.3 If AMIT elects to exercise the Option as specified in the
Option Notice, then MAE GP shall sell the Shares specified in
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the Option Notice to AMIT, and AMIT shall purchase the Shares from MAE GP, on
the Closing Date.
4.4 On the Closing Date, AMIT shall deliver to MAE GP cash or a
certified or bank cashier's check in the amount of the Purchase Price,
representing payment in full for the Shares, and MAE GP shall deliver to AMIT
the original certificate or certificates representing the Shares, together with
stock assignment separate from certificate(s), duly endorsed (with signatures
guaranteed, if requested by AMIT), in form and substance reasonably
satisfactory to AMIT.
5. Covenants, Representations and Warranties.
5.1 Concurrently with the execution of this Option Agreement, MAE
GP shall deliver to AMIT an irrevocable voting proxy (which proxy shall be
coupled with an interest) with regard to the Shares, executed by MAE GP, which
proxy shall be in the form attached hereto as Exhibit "A" (the "Proxy").
Pursuant to the terms of the Proxy, MAE GP shall transfer to AMIT any and all
voting rights with respect to the Shares with regard to any and all shareholder
voting which may occur relating to issues within the scope of the Proxy, (the
"Proxy Issues"); provided, however, that AMIT must vote the Shares on Proxy
Issues in accordance with the vote of the majority of AMIT Class A Shares
voting with regard to any particular Proxy Issue, such majority to be
determined without consideration of the votes of "Excess Class A Shares" as
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defined in Paragraph 6.13 of AMIT's Declaration of Trust dated September 1,
1988.
5.2 MAE GP hereby waives any dividends ("Waived Dividends") from
earnings paid or declared by AMIT with respect to the Shares, and any capital
distributions ("Waived Distributions") paid or declared by AMIT with respect to
the Shares, during the period commencing with the date hereof and continuing
through the Option Exercise Date, or the Closing Date if AMIT elects to
exercise the Option (the "Option Period"); provided that, if AMIT fails to
exercise the Option by the Option Exercise Date, AMIT shall pay or distribute
(as applicable) to MAE GP, immediately after the Option Exercise Date, all
Waived Dividends and Waived Distributions, with interest on fourteen percent
(14%) of any cash Waived Dividends and cash Waived Distributions at the rate of
8.6% per annum from the date such dividend or distribution would have been
distributed by AMIT to MAE GP but for this waiver.
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5.3 Concurrently with the execution of this Option Agreement, MAE
GP shall deliver to AMIT all outstanding certificates representing the Shares
so that such certificates can be endorsed with the following legend:
SALE, ASSIGNMENT, TRANSFER OR HYPOTHECATION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY THE
PROVISIONS OF AN OPTION AGREEMENT BETWEEN MAE GP CORPORATION
AND ANGELES MORTGAGE INVESTMENT TRUST DATED AS OF APRIL 10,
1995, A COPY OF WHICH MAY BE INSPECTED AT AMIT'S PRINCIPAL
OFFICE, AND ALL OF THE PROVISIONS OF WHICH ARE INCORPORATED BY
REFERENCE IN THIS CERTIFICATE.
Such legend shall be conspicuously endorsed by AMIT on the face of each
certificate representing the Shares, and then promptly returned to MAE GP.
During the Option Period, if MAE GP purchases Additional Shares, immediately
thereafter MAE GP shall deliver to AMIT the share certificates representing
such Additional Shares so that such certificates can be endorsed with the
legend set forth above and promptly returned to MAE GP. A copy of this Option
Agreement shall be delivered by AMIT to AMIT's secretary, who shall show a copy
of this Option Agreement to any person making proper inquiry about it.
5.4 MAE GP hereby represents and warrants to AMIT as follows:
5.4(a) MAE GP is the owner of 1,675,113 issued and outstanding AMIT
Class B Shares. MAE GP owns such shares, i.e.,
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the Initial Shares, free and clear of any liens, encumbrances, charges,
agreements and restrictions, except for the restrictions imposed by this Option
Agreement, and as otherwise disclosed in writing on the Initial Shares, and MAE
GP shall maintain the Initial Shares free and clear of any liens, encumbrances,
charges, agreements and restrictions, except for the restrictions imposed by
this Option Agreement, and as otherwise disclosed in writing on the Initial
Shares, until the Option Exercise Date, or the Closing Date if AMIT exercises
the Option.
5.4(b) To the extent MAE GP acquires Additional Shares, MAE
GP shall own and hold the Additional Shares free and clear of any liens,
encumbrances, charges, agreements and restrictions, except for the restrictions
imposed by this Option Agreement, and as otherwise disclosed in writing on the
Additional Shares, until the Option Exercise Date, or the Closing Date if AMIT
exercises the Option.
5.4(c) MAE GP has or shall have the full power to transfer
the Shares to AMIT as of the Closing Date, in accordance with the terms hereof,
without obtaining the consent or approval of any person, entity or governmental
authority.
5.4(d) MAE GP has not, voluntarily or by operation of law,
assigned, transferred, hypothecated or otherwise conveyed all or any portion of
the Shares, and shall not, voluntarily or by
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operation of law, assign, transfer, hypothecate or otherwise convey all or any
portion of the Shares.
5.4(e) Upon the due and valid execution and delivery of this
Option Agreement, this Option Agreement shall be binding upon MAE GP in
accordance with its terms.
5.5 AMIT hereby represents and warrants to MAE GP that upon the
due and valid execution and delivery of this Option Agreement, this Option
Agreement shall be binding upon AMIT in accordance with its terms.
6. Issuance of New Shares.
6.1 If AMIT issues Class A Shares in addition to the AMIT Class A
Shares currently issued and outstanding during the Option Period, MAE GP shall
have the right to purchase Additional Shares in a sufficient amount such that
MAE GP may maintain the current ratio of two (2) AMIT Class A Shares issued and
outstanding for each AMIT Class B Share which is issued and outstanding. MAE
GP may purchase the Additional Shares from AMIT at a purchase price per share
equal to 1/99th of the sale price of each AMIT Class A Share. Nothing in this
paragraph is intended to limit MAE GP's right to receive Additional Shares
under Paragraph 6.1 of AMIT's Declaration of Trust dated September 1, 1988, or
applicable law.
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6.2 AMIT shall deliver written notice to MAE GP prior to or
concurrently with its issuance of AMIT Class A Shares in addition to the AMIT
Class A Shares currently issued and outstanding, which notice shall specify the
per share selling price for each AMIT Class A Share. MAE GP shall have ten
(10) business days following its receipt of such notice to elect to purchase
Additional Shares, and shall exercise its election to purchase the Additional
Shares by delivery of written notice thereof to AMIT, together with cash or a
certified or bank cashier's check in the amount of the purchase price for the
Additional Shares (the "Purchase Notice"). Within ten (10) business days
following AMIT's receipt of the Purchase Notice, AMIT shall deliver to MAE GP a
certificate or certificates representing the Additional Shares.
7. Definition.
The term "deliver" as used in this Option Agreement shall mean and
refer to personal delivery, except with respect to Section 4.2, in which case
"delivery" shall mean and refer to personal delivery, facsimile transmission or
United States mail.
8. Miscellaneous.
8.1 This Option Agreement is made under and shall be construed,
governed and enforced in accordance with the laws of the State of California.
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8.2 This Option Agreement shall be binding upon and inure to the
benefit of the heirs, administrators, executives, representatives, successors,
agents and assigns of each of the parties hereto.
8.3 If any portion of this Option Agreement shall be held illegal,
unenforceable, void or voidable by any court having jurisdiction over the
subject matter hereof, each of the remaining terms hereof shall nevertheless
remain in full force and effect to the full extent permitted by law.
8.4 This Option Agreement may be executed in any number of
counterparts, each of which shall be deemed the original, but all of which,
when taken together, shall constitute one and the same instrument.
8.5 In the event of any action based upon a failure to perform any
obligation under this Option Agreement, or to enforce the provisions of this
Option Agreement, the prevailing party in such action will be entitled to
recover its reasonable attorneys, fees and costs from the non-prevailing party.
8.6 In addition to attorneys' fees and costs provided for in
Section 8.5 hereof, the parties agree that if any dispute between the parties
results in a judgement in favor of either party, the prevailing party will be
entitled to recover from the other all
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attorneys' fees and costs incurred by it in enforcing such judgement. This
provision is intended to be severable from any other provision of this Option
Agreement, and is not to be deemed merged in the judgement.
IN WITNESS WHEREOF, this Option Agreement has been executed by the
parties on the date and at the place set forth opposite their respective
signatures below.
"MAE GP"
MAE GP corporation, a Delaware
corporation
Dated: April 14, 1995 By: _______________________________
Its: ______________________________
"AMIT"
Angeles Mortgage Investment Trust,
a California business trust
Dated: April 14, 1995 By: _______________________________
Its: ______________________________
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