Exhibit #99.1
CAPITAL ALLIANCE INCOME TRUST LTD.,
A REAL ESTATE INVESTMENT TRUST
1998 INCENTIVE STOCK OPTION PLAN
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SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
(a) This plan is the 1998 Stock Option Plan (the "Plan") of Capital
Alliance Income Trust Ltd., A Real Estate Investment Trust, a Delaware
corporation (the "Trust"). This Plan was adopted by the Board on April 16, 1998,
subject to the approval of the Trust's shareholders. The purpose of this Plan is
to enable the Trust, its Subsidiaries and its Manager to obtain and retain
competent employees, directors and others who will contribute to the Trust's
success by their ability, ingenuity and industry, and to provide incentives to
such individuals and entities that are linked directly to increases in
shareholder value which will, therefore, inure to the benefit of all
shareholders of the Trust.
(b) For purposes of this Plan, the following terms shall have meanings
set forth below:
(1) "Award" means any grant of a Stock Option.
(2) "Board" means the Board of Directors of the Trust.
(3) "Cause" means any one or more of the following: (A) a
Participant's commission of a crime which, in the judgment of the Committee, is
likely to result in injury to an Employer; (B) a Participant's material
violation of written policies of an Employer; (C) a Participant's habitual
neglect in the performance of his duties to an Employer; (D) a Participant's
action or inaction in connection with his duties to an Employer intended to
result, in the judgment of the Committee, in material injury to an Employer; or
(E) a Participant's termination from employment by an Employer for "cause", as
that term is defined or used in such Participant's employment agreement with
such Employer.
(4) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.
(5) "Committee" means the Compensation Committee of the
Board, or, if there is no Compensation Committee of the Board, the entire Board.
(6) "Disability" means permanent and total disability as
determined under the Employer's disability program or policy.
(7) "Effective Date" shall mean the date of the closing of
the IPO under the Trust's registration statement initially filed under the
Securities Act of 1933 with the Securities and Exchange Commission on Form S-11
on September 9, 1996 in connection with the IPO.
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(8) "Eligible Recipient" means (i) any employee (including
any officer) of an Employer, (ii) any director of an Employer, (iii) the
Manager, or (iv) any other individual or entity performing services for the
Trust or a Subsidiary.
(9) "Employer" means the Trust, any Subsidiary or the
Manager.
(10) "Exercise Price" means the price per share at which the
Stock subject to a Stock Option may be purchased.
(11) "Fair Market Value" means with respect to any Awards
hereunder, as of any given date (other than on the IPO Closing Date), (A) the
closing sale price of the Stock on such date as reported in the Western Edition
of the Wall Street Journal Composite Tape (or, if no sale of the Stock was
reported for such date, on the next preceding date on which a sale of the Stock
was reported) or (B) if on such date the Stock is not listed on any securities
exchange or quoted on the National Association of Securities Dealers, Inc.'s
NASDAQ National Market System, the highest price per share which the Trust then
could obtain from a willing buyer of authorized but unissued shares of Stock if
the Trust were selling such shares of Stock, as determined in good faith by the
Board. Solely as of the IPO Closing Date, Fair Market Value of the Stock means
the price per share at which the Stock first is offered for sale to the public
pursuant to the prospectus used in connection with the IPO, as that price is
indicated in such prospectus.
(12) "First Exercise Date" means the first date on which a
Stock Option is exercisable.
(13) "Immediate Family" means, with respect to a Participant
who is an individual, such Participant's spouse, siblings, parents, children or
grandchildren or a trust established for the benefit of such Participant's
spouse, siblings, parents, children or grandchildren.
(14) "Incentive Stock Option" means any Stock Option
designated and qualifying as an "incentive stock option" within the meaning of
Section 422 of the Code.
(15) "IPO" means the initial public offering of the Stock of
the Trust.
(16) "IPO Closing Date" means the date on which Stock last is
offered for sale to the public pursuant to the prospectus used in connection
with the IPO.
(17) "IPO Stock Option" means any Stock Option that is granted
as of the IPO Closing Date.
(18) "Last Exercise Date" means the last date on which a Stock
Option is exercisable.
(19) "Manager" means Capital Alliance Advisors, Inc. a
California corporation.
(20) "Non-Qualified Stock Option" means any Stock Option that
is not an Incentive Stock Option, including any Stock Option that provides (as
of the time of its Award) that it will not be treated as an Incentive Stock
Option.
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(21) "Option Term" means the period of time beginning on the
date of Award of a Stock Option and ending on the Last Exercise Date.
(22) "Parent Corporation" means any corporation (other than
the Trust) in an unbroken chain of corporations ending with the Trust, if each
of the corporations in the unbroken chain (other than the Trust) owns stock
possessing 50% or more of the combined voting power of all classes of stock in
one of the other corporations in the chain.
(23) "Participant" means any Eligible Recipient selected to
receive an Award of a Stock Option pursuant to the authority granted to the
Committee in Section 2.
(24) "Permitted Transferee" means, with respect to a
Participant who is an individual, a member of such Participant's Immediate
Family to whom a Stock Option has been transferred with the approval of the
Committee pursuant to Section 5(h).
(25) "Stock" means the Common Stock, par value $.001 per
share, of the Trust.
(26) "Stock Option" means any option to purchase shares of
Stock granted pursuant to this Plan.
(27) "Stock Option Agreement" means the written agreement by
which a Stock Option and the Award thereof shall be evidenced.
(28) "Subsidiary" means any corporation (other than the Trust)
in an unbroken chain of corporations beginning with the Trust if each of the
corporations in the unbroken chain (other than the last corporation in the
chain) owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain.
(29 ) "Termination of Affiliation" means the first day on
which an individual or entity for any reason no longer is performing services
for the Trust, its Subsidiary or the Manager.
(30) "Trust" means Capital Alliance Income Trust Ltd., A Real
Estate Investment Trust, a corporation organized under the laws of the State of
Delaware (or any corporation into which it is merged or with which it is
consolidated).
(31) "Unexercised Stock Option" means any Stock Option which
has not been fully exercised.
(32) "Voluntary Termination of Affiliation" means a
Termination of Affiliation resulting from the resignation, retirement, quitting
or other voluntary cessation of all affiliations with an Employer.
SECTION 2. ADMINISTRATION; AUTHORITY.
(a) This Plan shall be administered by the Committee.
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(b) The Committee shall have the power and authority to make Awards of
Stock Options to Eligible Recipients pursuant to the terms of this Plan.
In particular, subject to Section 4, the Committee shall have the
authority:
(1) to select those Eligible Recipients who will become
Participants;
(2) to determine whether, when and to what extent Awards of
Stock Options are to be made to Participants hereunder;
(3) to determine the number of shares of Stock to be the
subject of each Award;
(4) to determine the terms and conditions of any Award
consistent with this Plan including, but not limited to, the First Exercise Date
and Last Exercise Date when all or a portion of the shares of Stock that are
subject to a Stock Option may be purchased; and
(5) to determine the terms and conditions, consistent with
this Plan, that shall be set forth in the Stock Option Agreement evidencing the
Award of a Stock Option made pursuant to this Plan.
(c) The Committee shall have the power and authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing this
Plan as the Committee from time to time shall deem advisable; to interpret the
terms and provisions of this Plan and any Award made under this Plan; and to
supervise the administration of this Plan.
(d) All decisions made by the Committee pursuant to the provisions of
this Plan shall be final and binding on all persons, including the Trust, its
Subsidiaries, the Manager and the Participants.
SECTION 3. STOCK SUBJECT TO PLAN.
(a) The total number of shares of Stock reserved and available for one
issuance under Awards of Stock Options pursuant to this Plan shall be two
hundred forty-seven thousand five hundred (247,500) shares of stock. Such shares
shall consist of authorized but unissued shares of Stock.
(b) If a Stock Option expires or otherwise is terminated without being
exercised, the shares of Stock that were subject to such expired or terminated
Stock Option again shall be available for issuance in connection with future
Awards made under this Plan. If any shares of Stock have been pledged as
collateral for indebtedness incurred by a Participant in connection with the
exercise of a Stock Option and certificates representing such shares of Stock
are surrendered to the Trust in satisfaction of such indebtedness, such shares
of Stock again shall be available for issuance in connection with future Awards
made under this Plan.
(c) If any merger, reorganization, consolidation, recapitalization,
stock dividend, or other change in the Trust's corporate structure occurs that
affects or could affect the Stock, a substitution or adjustment may be made in
(i) the aggregate number of shares of Stock reserved for issuance under this
Plan, and (ii) the kind, number and option price of shares of Stock subject to
outstanding Awards of
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Stock Options made under this Plan, in each case as determined by the Committee
in its reasonable discretion to be appropriate under the circumstances, provided
that the number of shares of Stock subject to any Award always shall be a whole
number.
SECTION 4. ELIGIBILITY; AWARD DETERMINATION.
Eligible Recipients who are responsible for or contribute to the
management, growth and/or profitability of the business of the Trust or a
Subsidiary shall be eligible for Awards of Non-Qualified Stock Options
hereunder. Eligible Recipients who are employees of the Trust or a Subsidiary
also shall be eligible for Awards of Incentive Stock Options hereunder. The
Committee shall determine the total number of shares of Stock subject to Awards
of Stock Options to be made as of any date; provided, however, that not less
than ninety percent (90%) of the total number of shares of Stock subject to
Awards of Stock Options made as of any date shall have been made to Eligible
Recipients who are employees (including officers) of the Manager, of which not
less than one-quarter (1/4) shall have been made as of such date to each of the
Chairman and the President of the Manager.
SECTION 5. STOCK OPTIONS FOR ELIGIBLE RECIPIENTS.
(a) General. Any Award of Stock Options under this Plan shall be in
such form as the Committee may from time to time approve, and the terms and
conditions of each Stock Option need not be the same with respect to each
Participant. A Participant shall enter into a Stock Option Agreement with the
Trust, in such form as the Committee shall determine, which agreement shall set
forth, among other things, the Exercise Price, the First Exercise Date and the
Last Exercise Date, the Option Term and other provisions regarding
exercisability of the Stock Options granted thereunder.
(b) Types of Stock Options. An award of Stock Options made under this
Plan may consist of either or both of two types of Stock Options: (i) Incentive
Stock Options (provided the Participant receiving such Incentive Stock Options
is an employee of the Trust or a Subsidiary), and (ii) Non-Qualified Stock
Options. If any Stock Option does not qualify as an Incentive Stock Option, it
shall be deemed to be a Non-Qualified Stock Option.
(c) Certain Terms and Conditions. An Award of Stock Options shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, consistent with this Plan, as the Committee shall deem
desirable:
(1 ) Exercise Price. The Exercise Price shall be determined by
the Committee at the time of Award, but shall be not less than 100% of the Fair
Market Value of the Stock on the date of such Award. If an employee of the Trust
or a Subsidiary owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Trust or any Parent Corporation or
Subsidiary and an Award of an Incentive Stock Option is made to such employee,
the Exercise Price of such Incentive Stock Option (to the extent required by the
Code at the time of Award) shall be not less than 110% of the Fair Market Value
of the Stock on the date of the Award of such Incentive Stock Option.
(2) Option Term. The Option Term of each Stock Option shall be
fixed by the Committee, but no Stock Option shall be exercisable more than ten
(10) years after the date of the
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Award of such Stock Option; provided, however, that if an employee of the Trust
or a Subsidiary owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Trust or any Parent Corporation or Subsidiary and an
Award of an Incentive Stock Option is made to such employee, the Option Term of
such Incentive Stock Option (to the extent required by the Code at the time of
grant) shall be no more than five (5) years.
(d) Exercisability. A Stock Option shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at the time of Award; provided that, except as otherwise provided in
this Plan, or unless otherwise determined by the Commiittee at the time of the
Award, a Stock Option shall be exercisable not earlier than one (1) year
following the date of its Award. If a Stock Option Agreement provides that a
Stock Option is exercisable only in installments, the Committee may waive such
installment exercise provisions at any time in whole or in part based on such
factors as the Committee may determine in its reasonable discretion to be
appropriate under the circumstances.
(e) Method of Exercise. Subject to Section 5(d) above and the terms and
conditions of the relevant Stock Option Agreement, a Stock Option may be
exercised in whole or in part at any time on or between the First Exercise Date
and Last Exercise Date by giving written notice of exercise to the Trust
specifying the number of shares of Stock to be purchased, accompanied by payment
in full of the purchase price in cash or its equivalent, as determined by the
Committee. Payment in whole or in part also may be made (i) in the form of Stock
already owned by the Participant (based on the Fair Market Value of the Stock on
the date the Stock Option is exercised), (ii) by cancellation of any
indebtedness owed by the Trust to the Participant, (iii) if approved by the
Committee, by a full recourse promissory note executed by the Participant, (iv)
pursuant to procedures approved by the Trust, through the sale of shares of
Stock acquired on exercise of the Stock Option through a broker-dealer to whom
the Participant has submitted an irrevocable notice of exercise and irrevocable
instructions to deliver to the Trust the amount of sale or loan proceeds
sufficient to pay for the shares of Stock, together with, if requested by the
Trust, the amount of Federal, state or local taxes payable by the Participant by
reason of such exercise, (v) pursuant to procedures approved by the Trust, and
with the prior approval of the Committee, by pyramiding (i.e., making payment to
the Trust with shares of Stock simultaneously acquired on exercise of the Stock
Option (based on the Fair Market Value of the Stock on the date the Stock Option
is exercised)) or (vi) by any combination of the foregoing. A Participant
generally shall have the right to dividends and other rights of a shareholder
with respect to shares of Stock subject to a Stock Option only after the
Participant has given written notice of exercise, has paid in full for such
shares of Stock and, if requested to do so by the Committee, has given the
representation described in Section 8(a), below.
(f) Elective Shares Tax Withholding. Subject to the conditions
specified in the following sentence, and with the Committee's prior approval, a
Participant may, upon the exercise of a Stock Option, elect that the Trust
withhold a portion of the shares of Stock otherwise deliverable to such
Participant having a Fair Market Value equal to either (i) the minimum amount
necessary to satisfy all Federal, state and local tax withholding requirements
related to such exercise, or (ii) a greater amount, not to exceed the estimated
total amount of such Participant's tax liability with respect to such exercise.
Each such share withholding election shall be subject to the following
conditions: (i) the Participant's election shall be subject to the Committee's
reasonable discretion to revoke the Participant's right to
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elect share withholding at any time before exercise of the Stock Option; (ii)
the Participant's election must be made before the date on which the amount of
tax to be withheld is determined; and (iii) the Participant's election shall be
irrevocable.
(g) Requirement of Surrender in Certain Cases. The Committee may
require that a Participant surrender all or a portion of any Stock Option as a
condition precedent to a grant of a new Stock Option. Subject to the provisions
of this Plan, such new Stock Option shall be exercisable at the price, during
such period and on such other terms and conditions as are specified in the Stock
Option Agreement presented to the Participant at the time the new Stock Option
is granted; provided, however, should the Committee so require, the number of
shares of Stock subject to such new Stock Option shall not be greater than the
number of shares of Stock subject to the surrendered Stock Option. The Stock
Options so surrendered shall be canceled and the shares of Stock previously
subject to such canceled Stock Options again shall be available for Awards of
Stock Options hereunder.
(h) Limited Transferability of Stock Options. No Stock Option shall be
transferable by a Participant other than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable during a Participant's
lifetime only by the Participant, except that (i) a Participant may, in a manner
permitted by the Committee and by law, transfer a Non-Qualified Stock Option to
a member of his or her Immediate Family or to a family trust for the benefit of
the Eligible Recipient and his/her Immediate Family, and (ii) the Manager may,
in a manner and to the extent permitted by the Committee and by law, transfer a
NonQualified Stock Option previously granted to it to any other Eligible
Recipient. The Committee's approval of a proposed transfer may be subject to the
satisfaction of such conditions as the Committee deems appropriate, including
(A) that the Stock Options that are the subject of such proposed transfer and
the Stock subject thereto be registered or exempt from registration under the
Securities Act of 1933, and (B) in the case of a proposed transfer by the
Manager pursuant to clause (ii) of the preceding sentence, that the Eligible
Recipient to whom such proposed transfer is to be made executes an agreement in
form satisfactory to the Committee to the effect that the Stock Options to be
transferred to him will be subject to the terms and conditions that would be
applicable to those Stock Options pursuant to this Plan (including without
limitation the provisions of this Section 5(h) and Sections 5(i) and 5(j),
below) if those Stock Options had been granted directly to such Eligible
Recipient, rather than to the Manager, pursuant to this Plan.
(i) Voluntary Termination. If a Participant has a Voluntary Termination
of Affiliation, all Unexercised Stock Options granted to such Participant,
whether or not such Stock Options have been transferred by such Participant to a
Permitted Transferee or otherwise, shall terminate immediately upon such
Voluntary Termination of Affiliation.
(j) Termination for Cause. If a Participant has a Termination of
Affiliation for Cause, all Unexercised Stock Options granted to such
Participant, whether or not such Stock Options have been transferred by such
Participant to a Permitted Transferee or otherwise, shall terminate immediately
upon such Termination of Affiliation.
(k) Other Termination. Except as otherwise determined by the Committee,
if a Participant has a Termination of Affiliation because of death or Disability
or for any other reason other than a Voluntary Termination of Affiliation and
other than a Termination of Affiliation for Cause, any Unexercised Stock Option
then held by such Participant or a Permitted Transferee thereafter may be
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exercised if and to the extent such Unexercised Stock Option is or thereafter
becomes exercisable in accordance with the terms of the related Stock Option
Agreement (or on such accelerated basis as the Committee may determine at or
after the date of Award), by the Participant or Permitted Transferee (or, if the
Participant or Permitted Transferee has died or shall thereafter die, by the
legal representative of the estate of that Participant or Permitted Transferee
or by the legatee of that Participant or Permitted Transferee under the will of
that Participant or Permitted Transferee), (i) for a period of twelve months (or
such shorter period as the Committee shall specify at the time of the Award)
from the later of (A) the date of the Participant's Termination of Affiliation
or (B) the date that such Unexercised Stock Option first becomes exercisable
(or, in the case of an Unexercised Stock Option that is exercisable in
installments, the date that the final installment first becomes exercisable) in
accordance with the terms of the related Stock Option Agreement (or on such
accelerated basis as the Committee may determine at or after the date of Award)
or (ii) until the expiration of the Option Term, whichever period is shorter. In
the event of a Termination of Affiliation to which this Section 5(k) applies, if
an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock Option
thereafter will be treated as a Non-Qualified Stock Option.
(l) Annual Limit on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the shares of Stock with respect to which Incentive Stock
Options granted under this Plan and all other option plans of the Trust or any
Parent Corporation or Subsidiary become exercisable for the first time by a
Participant during any calendar year exceeds $100,000, such options shall be
treated as Non-Qualified Stock Options. The preceding sentence shall be applied
by taking options into account in the order in which they were granted.
(m) Annual Limit on All Stock Options. More than one (1 ) Stock Option
may be granted to an Eligible Recipient during any fiscal year of the Trust, but
the aggregate number of shares of Stock underlying all Stock Options granted to
any Eligible Recipient during any such fiscal year shall not exceed fifty
percent (50%) of the shares of Stock reserved for issuance under this Plan
pursuant to Section 3 of this Plan.
(n) Disqualifying Disposition. If a Participant makes a disqualifying
disposition (within the meaning of Section 421 (b) of the Code) of shares of
Stock acquired pursuant to the exercise of an Incentive Stock Option, such
Participant shall provide written notice thereof to the Trust within 10 days
after such disqualifying disposition.
(o) Notice of Section 83(b) Election. If a Participant, in connection
with the exercise of a Stock Option, makes the election permitted under Section
83(b) of the Code to include in such Participant's gross income in the year of
transfer the amounts specified in Section 83(b) of the Code, then such
Participant shall notify the Trust of such election within 10 days after filing
the notice of such election with the Internal Revenue Service.
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SECTION 6. AMENDMENT AND TERMINATION.
(a) The Board may amend, alter or discontinue this Plan, provided that
no such action shall be taken by the Board that would impair the economic or
legal rights of a Participant under any Award previously granted without such
Participant's consent, and provided that, without the approval of the Trust's
shareholders, no such action shall:
(1) increase the total number of shares of Stock reserved and
available for issuance under Awards of Stock Options pursuant to this Plan,
except as otherwise provided in Section 3;
(2) decrease the Exercise Price of any Stock Option to less
than 100% of the Fair Market Value on the date of the Award of that Stock
Option;
(3) materially change the individuals or entities or class of
individuals or entities eligible to participate in this Plan;
(4) materially increase the benefits accruing to Participants
under this Plan; or
(5) extend the Option Term beyond the maximum term permitted
by Section 5(c)(2), above.
(b) The Committee may amend the terms of any Award previously granted,
prospectively or retroactively, but notwithstanding any other provision of this
Agreement, no such amendment shall impair the rights of any Participant without
his consent.
SECTION 7. UNFUNDED STATUS OF PLAN.
This Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Trust, nothing contained herein shall give any such Participant any rights that
are greater than those of a general creditor of the Trust.
SECTION 8. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares of Stock
pursuant to a Stock Option to represent to the Trust in writing that such person
is acquiring those shares of Stock without a view towards distribution thereof.
All certificates for shares of Stock delivered under this Plan shall be subject
to such stock transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Stock then is listed,
and any applicable Federal or state securities law, and the Committee may cause
a legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan shall not confer upon any employee of the Trust or any Subsidiary or the
Manager any right to
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continued employment with the Trust or a Subsidiary or the Manager , as the case
may be, nor shall it interfere in any way with the right of the Trust or a
Subsidiary or the Manager to terminate the employment of any of its employees at
any time.
(c) Each Participant shall, no later than the date as of which the
value of an Award first becomes includable in the gross income of the
Participant for Federal income tax purposes, pay to the Trust, or make
arrangements satisfactory to the Committee regarding payment of, any Federal,
state, or local taxes of any kind required by law to be withheld with respect to
such Award. The obligations of the Trust under this Plan shall be conditional on
such payment or arrangements, and the Trust (and, where applicable, its
Subsidiaries) shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the Participant.
(d) No member of the Board or the Committee, nor any officer or
employee of the Trust acting on behalf of the Board or the Committee, shall be
liable personally for any action, determination, or interpretation taken or made
in good faith with respect to this Plan, and all members of the Board and the
Committee and each and every officer or employee of the Trust acting on their
behalf shall, to the extent permitted by law, be exculpated, indemnified and
protected fully by the Trust in respect of any such action, determination or
interpretation.
SECTION 9. SPECIFIC PERFORMANCE.
The Stock Options granted under this Plan and the shares of Stock
issued pursuant to the exercise of such Stock Options may not be readily
purchased or sold in the open market unless such securities have been registered
under the Securities Act of 1933 or an exemption from such registration is
available, and, for that reason among others, the Trust and its shareholders
will be damaged irreparably if this Plan is not specifically enforced. If any
controversy arises concerning the right to purchase or obligation to sell any
shares of Stock subject to a Stock Option, such right or obligation shall be
enforceable in a court of equity by a decree of a specific performance. Such
remedy shall, however, be cumulative and not exclusive, and shall be in addition
to any other remedy that the parties may have.
SECTION 10. INVALID PROVISIONS; CONSTRUCTION OF PLAN.
If any provision of this Plan is found to be invalid or otherwise
unenforceable under any applicable law, such invalidity or unenforceability
shall not be construed as rendering any other provisions contained herein
invalid or unenforceable, and all such other provisions shall be given full
force and effect to the same extent as though the invalid or unenforceable
provision was not contained herein. Headings at the beginning of each Section of
this Plan are solely for convenience and are not a part of this Plan. Whenever
required by the context of this Plan, the singular shall include the plural and
the masculine shall include the feminine and neuter, and vice versa.
SECTION 11. APPLICABLE LAW.
This Plan shall be governed by and construed in accordance with the
laws of the State of California.
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SECTION 12. SUCCESSORS AND ASSIGNS.
This Plan shall be binding on and inure to the benefit of the Trust and
the Participants to whom a Stock Option is granted hereunder, and such
Participants' heirs, executors, administrators, successors, legatees, personal
representatives, assignees and transferees.
SECTION 13. EFFECTIVE DATE OF PLAN.
This Plan shall be effective as of the Effective Date.
SECTION 14. TERM OF PLAN.
No Award of a Stock Option shall be granted pursuant to this Plan on or
after the tenth anniversary of the earlier of the date this Plan is adopted by
the Board or approved by the Trust's shareholders, but Awards previously made
may extend beyond that date.
IN WITNESS WHEREOF, and pursuant to a resolution of the Board adopting
this Plan and authorizing its execution, the Trust has caused this Plan to be
duly executed by its duly authorized signatory on the day and year first above
written.
CAPITAL ALLIANCE INCOME TRUST LTD.,
A REAL ESTATE INVESTMENT TRUST
By: /S/ Thomas B. Swartz
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Thomas B. Swartz
Chairman of the Board of Directors
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STOCK OPTION AGREEMENT
This AGREEMENT is made effective as of the _____ day of ______________,
19____ (the "Award Date"), by and between Capital Alliance Income Trust Ltd.,
A Real Estate Investment Trust., a Delaware corporation (the "Trust") and
(the ____________________________________ "Optionee").
RECITALS
WHEREAS, the Board of Directors of the Trust has established the 1998
Stock Option Plan (the "Plan") effective as of ____________________, 1998, and
WHEREAS, pursuant to the provisions of said Plan, the Board of
Directors of the Trust or its Compensation Committee (the "Committee"), by
action duly taken on ______________________, 1998, granted to the Optionee an
option or options (the "Option(s)") to purchase shares of the Common Stock of
the Trust (the "Optioned Shares") on the terms and conditions set forth herein.
Capitalized terms set forth herein, unless otherwise defined, shall have the
meaning set forth in the Plan.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein and other good and valuable consideration, the
parties hereto agree as follows:
Section 1. The Option(s). The Optionee may, at his option, purchase all
or any part of an aggregate of shares of Common Stock, at the price of
$__________ per share (the "Exercise Price"), on the terms and conditions set
forth herein.
Section 2. Plan Type; Exercise Dates and Method of Exercise. Options
intended to qualify as Incentive Stock Options are designated by "ISO" under the
category "Plan." Options intended as Non-Qualified Stock Options are designated
by "NQO" under the category "Plan." The Option(s) shall be exercisable as to the
specified number of Optioned Shares on and after the "First" dates and on or
before the "Last" dates set forth below:
Plan Number of Optioned Shares Exercise Dates
---- ------------------------- --------------
First Last
----- ----
------- ------------ ------- -------
------- ------------ ------- -------
------- ------------ ------- -------
Optionee acknowledges, understands and agrees that he has no right
whatsoever to exercise the Option(s) granted hereunder with respect to any
Optioned Shares until the First Exercise Date of such Optioned Shares as
provided above. Optionee further understands that the Option(s) granted
hereunder
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shall expire and become unexercisable after the Last Exercise Date and otherwise
as provided in Section 3(c) below.
This Option shall be deemed exercised as to the Optioned Shares to be
purchased when written notice of such exercise has been given to the Trust at
its principal business office by the Optionee. Such notice shall be accompanied
by full payment (i) in cash or cash equivalents, (ii) in Stock already owned by
the Optionee (based on the Fair Market Value of the Stock on the date the Option
is exercised), (iii) if approved by the Committee, by a full recourse promissory
note executed by the Optionee in such form, and with such terms and conditions,
as the Committee may require, (iv) by cancellation of any indebtedness owed by
the Trust to the Optionee, (v) pursuant to procedures approved by the Trust,
through the sale of Optioned Shares acquired on exercise of the Option through
broker-dealer to whom the Optionee has submitted an irrevocable notice of
exercise and irrevocable instructions to deliver to the Trust the amount of sale
or loan proceeds sufficient to pay for the Optioned Shares to be purchased,
together with, if requested by the Trust, the amount of Federal, state or local
taxes payable by the Participant by reason of such exercise; (vi) pursuant to
procedures approved by the Trust, and with the prior approval of the Committee,
by pyramiding (i.e., making payment to the Trust with Optioned Shares
simultaneously acquired on exercise of the Option (based on the Fair Market
Value of the Stock on the date the Option is exercised)), or (vii) by any
combination of the foregoing as may be approved by the Committee with respect to
the Optioned Shares to be purchased. The approval of the Committee may be
granted, withheld or conditioned as determined appropriate by the Committee in
its reasonable discretion.
Section 3. Governing Plan. This Agreement hereby incorporates by
reference the Plan and all of the terms and conditions of the Plan as heretofore
amended and as the same may be amended from time to time hereafter, but no such
subsequent amendment shall adversely affect the Optionee's rights under this
Agreement and the Plan as it existed before such subsequent amendment except as
may be required by applicable law. The Optionee expressly acknowledges and
agrees that the provisions of this Agreement are subject to the Plan; the terms
of this Agreement shall not limit or modify the Plan; and in case of any
conflict between the provisions of the Plan and this Agreement, the provisions
of the Plan shall be controlling and binding upon the parties hereto. The
Optionee also hereby expressly acknowledges, represents and agrees as follows:
(a) The Optionee acknowledges receipt of a copy of the Plan, a copy of
which is attached hereto and by reference incorporated herein, and represents
that he is familiar with the terms and conditions of the Plan and hereby accepts
this Agreement subject to all of the terms and provisions of the Plan.
(b) The Optionee agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Plan.
(c) The Optionee acknowledges and represents that he is familiar with
Sections of the Plan regarding the exercise of the Option(s) and that he
understands that said Option(s) must be exercised on or before the earliest of
the following dates, whichever is applicable: (i) the "Last" exercise date noted
above in Section 2 of this Agreement; (ii) the day prior to the fifth
anniversary of the Award Date with respect to Options granted as Incentive Stock
Options and the day prior to the tenth anniversary of the Award Date with
respect to Options granted as Non-Qualified Stock Options; or (iii) if the
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Optionee has a "Termination of Affiliation" (as that term is defined in the
Plan), the last date for exercise, or date prior to termination of the
Option(s), specified in Subsection 5(i), (j) or (k), as applicable, of the Plan.
(d) The Optionee acknowledges, understands and agrees that the
existence of the Plan and the execution of this Agreement are not sufficient by
themselves to cause the exercise of any Option(s) granted as an Incentive Stock
Option to qualify for favorable tax treatment through the application of Section
422 of the Internal Revenue Code; that Optionee must, in order to so qualify,
individually meet by his own action all applicable requirements of Section 422,
including without limitation the following holding period and employment
requirements:
(1) holding period requirement: no disposition of an Optioned
Share may be made by Optionee within two (2) years from the date of the granting
of the Option(s) nor within one (1) year after the transfer of such Optioned
Share to him; and
(2) employment requirement: at all times during the period
beginning on the date of the granting of the Option(s) and ending on the day
three (3) months before the date of exercise, the Optionee must have been an
employee of the Trust, the parent or a subsidiary of the Trust, or a corporation
or a parent or subsidiary of such corporation issuing or assuming the Option(s)
in a transaction to which Section 424(a) of the Internal Revenue Code applies,
except where the termination of employment is by means of the employee's
disability, in which case said three (3) month period may be extended to one (1)
year, as provided under Internal Revenue Code Section 422.
Section 4. Additional Representations and Warranties. As a condition to
the exercise of any Option(s), the Trust may require the person exercising such
Option(s) to make any representation and/or warranty to the Trust that may, in
the judgment of counsel to the Trust, be required under any applicable law or
regulation, including but not limited to a representation and warranty that the
shares are being acquired only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the Trust,
such a representation is required under the Securities Act of 1933 or any other
applicable law, regulation or rule of any governmental agency. Optionee hereby
represents to the Trust that each of the Option(s) evidenced hereby and the
shares of Stock purchasable upon exercise thereof is being acquired only for
investment and without any present intention to sell or distribute such
securities.
Section 5. Limited Transferability of Options. The Option(s) may be
exercised during the lifetime of the Optionee only by the Optionee or, to the
extent permitted by the Committee in its discretion, a member of the Optionee's
Immediate Family (as that term is defined in the Plan). The Optionee's rights
and interests under this Agreement and in and to the Option(s) may not be sold,
pledged, hypothecated, assigned, encumbered, gifted or otherwise transferred in
any manner, either voluntarily or involuntarily by operation of law, except by
will or the laws of descent or distribution, and except that (i) the Optionee
may, in a manner and to the extent permitted by the Committee in its reasonable
discretion, transfer the Option(s) to a member of the Optionee's Immediate
Family, and (ii) the Manager may, in a manner and to the extent permitted by the
Committee and the Plan, transfer a Non-Qualified Stock Option previously granted
to it to any other Eligible Recipient.
Section 6. No Enlargement of Employee Rights. Nothing in this Agreement
shall be construed to confer upon an Optionee who is an employee of the Trust or
any Subsidiary any right to continued
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employment with the Trust or any Subsidiary, or to restrict in any way the right
of the Trust or any Subsidiary to terminate his employment. The Optionee
acknowledges that in the absence of an express written employment agreement to
the contrary and subject to applicable law, optionee's employment with the Trust
or a Subsidiary may be terminated by the Trust or Subsidiary at any time, with
or without cause.
Section 7. Withholding of Taxes. The Optionee authorizes the Trust to
withhold from any compensation payable to him any taxes required to be withheld
by federal, state or local law as a result of the Award of the Option(s) or the
issuance of stock pursuant to the exercise of such Option(s).
Section 8. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
Section 9. Successors and Assigns. The terms of this Agreement shall be
binding upon the heirs, executors, administrators, successors, legatees,
assignees and transferees of the Optionee.
Section 10. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement or the Plan, the
unsuccessful party to such litigation, as determined by the court in a final
judgment or decree, shall pay to the successful party all costs, expenses and
reasonable attorneys' fees incurred by the successful party (including, without
limitation, costs, expenses and fees on any appeals), which shall be included as
part of the judgment.
Section 11. Necessary Acts. The Optionee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
Section 12. Counterparts. For convenience, this Agreement may be
executed in any number of identical counterparts, each of which shall be deemed
a complete original in itself and each of which may be introduced in evidence or
used for any other purpose without the production of any other counterparts.
Section 13. Invalid Provisions. If any provision of this Agreement is
found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid and unenforceable provision was not contained herein.
Section 14. Limitation on Value of Certain Optioned Shares. Optionee
acknowledges that the Plan provides that the aggregate fair market value
(determined as of the date hereof) of the shares of Common Stock as to which
options granted as Incentive Stock Options are exercisable for the first time by
Optionee during any calendar year under all incentive stock option plans of the
Trust and any Subsidiary shall not exceed $100,000. It is understood and agreed
that if it is determined that Option(s) granted as an Incentive Stock Option
hereunder would exceed such limitation, such Option(s) shall be considered
granted as Non-Qualified Stock Option(s) to the extent of such excess. The
preceding sentence shall be applied by taking the Incentive Stock Options
granted under this Plan and the
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incentive stock options granted under all other plans of the Trust and any
Subsidiary into account in the order in which they were granted. This limitation
does not apply to any Option(s) granted as a Non-Qualified Stock Option.
NOTICE: IF AN OPTIONEE (A) MAKES A DISQUALIFYING DISPOSITION (WITHIN THE MEANING
OF SECTION 421 (B) OF THE INTERNAL REVENUE CODE) OF SHARES OF STOCK ACQUIRED
PURSUANT TO THE EXERCISE OF AN INCENTIVE STOCK OPTION, OR (B) MAKES, IN
CONNECTION WITH THE EXERCISE OF A STOCK OPTION, THE ELECTION PERMITTED UNDER
SECTION 83(B) OF THE INTERNAL REVENUE CODE TO INCLUDE IN SUCH OPTIONEE'S GROSS
INCOME IN THE YEAR OF TRANSFER THE AMOUNTS SPECIFIED IN SAID SECTION 83(B), SUCH
OPTIONEE MUST PROVIDE WRITTEN NOTICE TO THE TRUST OF SUCH DISQUALIFYING
DISPOSITION OR ELECTION, AS APPLICABLE, WITHIN 10 DAYS AFTER SUCH DISQUALIFYING
DISPOSITION OR FILING OF THE NOTICE OF THE SECTION 83(B) ELECTION WITH THE
INTERNAL REVENUE SERVICE, RESPECTIVELY.
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IN WITNESS WHEREOF, the Trust and the Optionee have executed this
Agreement effective as of the date first written above.
CAPITAL ALLIANCE INCOME TRUST LTD., OPTIONEE
A REAL ESTATE INVESTMENT TRUST
By: -------------------------- --------------------------
Name:
Title:
------------------------------------------------
Street Address
------------------------------------------------
City and State
------------------------------------------------
Social Security Number
By his or her signature below, the spouse of the Optionee to whom such
Optionee is legally married as of the date of execution of this Agreement
acknowledges that he or she has read, understands and agrees to be bound by all
of the terms and conditions of this Agreement and the Plan.
------------------------------------------------
Spouse
------------------------------------------------
Social Security Number
Dated: -----------------------------------------
By his or her signature below, the Optionee represents that he or she
is not legally married as of the date of execution of this Agreement.
------------------------------------------------
Optionee
Dated: -----------------------------------------
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