1
EXHIBIT 4.2
SHAREHOLDER WARRANT AGREEMENT
DATED AS OF ______________, 1997
BETWEEN
CAPITAL ALLIANCE INCOME TRUST LTD.,
A REAL ESTATE INVESTMENT TRUST
AND
CAPITAL ALLIANCE ADVISORS, INC.
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
OF
CAPITAL ALLIANCE INCOME TRUST LTD.,
A REAL ESTATE INVESTMENT TRUST
174
2
SHAREHOLDER WARRANT AGREEMENT
AGREEMENT made as of ____________, 1997, by and between CAPITAL
ALLIANCE INCOME TRUST LTD., A Real Estate Investment Trust, a Delaware
corporation (herein called the "Trust"), and CAPITAL ALLIANCE ADVISORS, INC. a
California corporation (herein called the "Warrant Agent").
RECITALS
The Trust has determined to issue and deliver warrants in
connection with the Trust's public offering (the "Offering") of a maximum of
1,750,000 shares of the Trust's common stock ("Common Shares"), entitling the
holders thereof to purchase up to an aggregate of 175,000 Common Shares
("Shares"). The Trust desires to provide in this Agreement for the form and
provisions of those warrants (the "Warrants"), the terms upon which they shall
be issued and exercised, and the respective rights and obligations of the Trust,
the Warrant Agent and the registered holders of the Warrants.
All acts and things necessary to make the Warrants, when executed
on behalf of the Trust and countersigned by or on behalf of the Warrant Agent,
as provided in this Agreement, the valid,binding and legal obligation of the
Trust, and to authorize the execution and delivery of this Agreement, have been
done and performed.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE 1
EXECUTION AND COUNTERSIGNATURE OF WARRANTS
1.1 (a) The Warrants to purchase Common Shares (the "Common
Warrants") shall be in substantially the form of Exhibit A hereto. Each Warrant
shall be signed by, or bear the facsimile signature of the Chairman of the Board
of the Trust and attested by the Secretary or an Assistant Secretary or
Treasurer or Assistant Treasurer of the Trust and shall bear a facsimile of the
Trust's seal. In case any officer whose facsimile signature has been placed upon
any Warrant shall have ceased to be such before such Warrant is issued, it may
be issued with the same effect as if such officer had not ceased to be such at
the date of issuance. No Warrant may be exercised until it has been
countersigned by the Warrant Agent as provided in paragraph (b) below.
(b) The Warrant Agent shall countersign a Warrant only
if:
(i) The Warrant is to be issued in substitution
for one or more previously duly issued and countersigned Warrants, as
hereinafter provided, or
(ii) The Trust instructs the Warrant Agent in
writing to do so.
(c) Unless and until countersigned by the Warrant
Agent pursuant to this Agreement, a Warrant shall be invalid and of no effect.
(d) Notwithstanding the provisions of this Article 1
or any other provision of this Agreement, Warrants will be issued in "unissued
certificate" form unless a shareholder makes a written request at the
commencement of the Warrant exercise period. Uncertificated Warrants will be
accounted for by the Trust's transfer agent in the same manner as Shares of the
Trust in similar form are accounted for.
ARTICLE 2
WARRANT PRICE, DURATION, EXERCISE OF WARRANTS
2.1 WARRANT PRICE. Each Warrant shall, when countersigned by the
Warrant Agent, entitle the registered holder thereof, subject to the provisions
thereof and of this Agreement, to purchase from the Trust the number of Common
Shares stated therein, at a price of $5.60 per Share, subject to adjustment as
provided in Article 3 hereto. The term "Warrant Price"
175
3
as used in this Agreement refers to the price per Share at which Shares may be
purchased pursuant to the Warrants at the time a Warrant is exercised.
2.2 DURATION OF WARRANTS. Warrants may be exercised only (i) on
or after a date (the "Exercise Period Commencement Date") that is the last day
of the twenty-fourth month following the effective date of the Trust's initial
public offering of Shares and (ii) on or before the date that is twenty-four
months after the Exercise Period Commencement Date (the "Expiration Date"). Each
Warrant not exercised on or before the Expiration Date shall become void, and
all rights thereunder and all rights in respect thereof under this Agreement
shall cease on the Expiration Date.
2.3 EXERCISE OF WARRANTS.
(a) A Warrant, when countersigned by the Warrant Agent, may
be exercised in whole or in part on or after the Exercise Period Commencement
Date and up until the Expiration Date (the "Exercise Period"). The registered
holder may exercise the Warrant by surrendering it, at the corporate office of
the Warrant Agent, or at the office of its successor as Warrant Agent, in the
State of California, with the subscription form set forth in the Warrant duly
executed, and by paying the Warrant Price in lawful money of the United States,
so that the Warrant Price for each full Share as to which the Warrant is
exercised and any applicable taxes are paid in full.
(b) As soon as practicable after the exercise of any Warrant
and upon the order of the registered holder of such Warrant, shall issue a
certificate or certificates for the number of full shares to which the holder is
entitled, registered in such name or names as may be directed by him or failing
such order shall be issued in uncertificated form. If such Warrant shall not
have been exercised in full (except with respect to a remaining fraction of a
Share), a new countersigned Warrant shall be issued for the number of Shares as
to which such Warrant shall not have been exercised.
In the event of the exercise of any Warrant in a manner which
leaves the right to purchase a fraction of a Share unexercised, the Trust shall
pay in lieu of such fractional interest, an amount in cash equal to the current
market value of such fractional share, to the nearest one-hundredth of a share
computed on the basis of (i) the last reported sale price of Shares for which
the Warrant is exercised on the date of that exercise on the principal national
securities exchange or system on which those Shares are listed or admitted to
trading, (ii) if the Shares are not so listed or admitted to trading, the
average of the high bid and low asked price on the over-the-counter market on
that date and, (iii) if the foregoing is inapplicable, the value of the Shares
as determined in good faith by the Directors of the Trust (hereinafter referred
to as "Trustees").
(c) All Shares issued upon the exercise of a Warrant shall be
validly issued, fully paid and nonassessable, and the Trust shall pay all taxes
in respect of the issue thereof. The Trust shall not be required, however, to
pay any tax imposed in connection with any transfer involved in the issue of a
certificate for Shares in any name other than that of the registered holder of
the Warrant surrendered in connection with the purchase thereof; and in such
case the Trust shall not be required to issue or deliver any Share certificate
until such tax is paid.
(d) Each person in whose name any such certificate for Shares
is issued shall for all purposes be deemed to have become the holder of record
of such Shares on the date on which the Warrant was delivered to the Warrant
Agent and payment of the Warrant Price and any applicable taxes was made,
irrespective of the date of delivery of such certificate; except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Trust are closed, such person shall be deemed to have become the holder of
such Shares at the close of business on the next succeeding date on which the
stock transfer books are open.
(e) Notwithstanding anything contained in this Section 2.3 or
elsewhere in this Agreement, the Trust, pursuant to Sections 8.5, 8.6 and 8.7 of
its Bylaws, may refuse the exercise of a Warrant if, in the opinion of counsel
for the Trust, the issuance of Shares to the Holder, upon such exercise would
disqualify the Trust as a "real estate investment trust" within the meaning of
the United States Internal Revenue Code as in effect at the time of exercise or
subject Trust property to treatment as "plan assets" under the Employee
Retirement Income Security Act of 1974.
176
4
ARTICLE 3
ADJUSTMENTS
3.1 RECAPITALIZATION OR SUBDIVISION.
(a) If any capital reorganization or reclassification of the
Shares of the Trust, or consolidation or merger of the Trust with another
entity, or the sale or all or substantially all of its assets to another entity,
shall be effected in such a way that holders of Shares shall be entitled to
receive stock, securities, cash or assets with respect to or in exchange for
Shares, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, each Warrant Holder shall have the right
thereafter and until the Expiration Date to exercise his Warrants for the kind
and amount of stock, securities, cash or assets receivable upon such
reorganization, reclassification, consolidation, merger or sale to which the
registered holder of such Warrant would be entitled had such Warrant been
exercised immediately prior to such reorganization, reclassification,
consolidation, merger or sale.
(b) In cast at any time the Trust shall subdivide its
outstanding Shares into a greater number of Shares, the Warrant Price in effect
immediately prior to such subdivision shall thereupon be proportionately reduced
and the number of Shares purchasable increased accordingly. For purposes of this
subparagraph (b), a dividend by the Trust payable in Shares of the Trust shall
be treated as a subdivision of the outstanding Shares. Conversely, in case the
outstanding Shares of the Trust shall be combined into a smaller number of
shares, the Warrant Price in effect immediately prior to such combination shall
be proportionately increased and the number of Shares purchasable decreased
accordingly.
(c) In case at any time the Trust shall take a record of the
holders of Shares for the purpose of entitling them to receive a dividend or
other distribution payable in Shares, then for purposes of this Section 3.1 such
record date shall be deemed to be the date of the issue of the Shares.
3.2 NOTICES OF CHANGES IN WARRANT. Upon any adjustment of the
Warrant Price and the number of Shares issuable on exercise of a Warrant, then,
and in each such case the Trust shall give written notice thereof to the
registered holder of the Warrant(s) at the address of such holder as shown on
the books of the Trust, and to the Warrant Agent, which notice shall state the
Warrant Price resulting from such adjustment and the increase or decrease, if
any, in the number of Shares purchasable at such price upon the exercise of a
Warrant, setting forth in reasonable detail thereof, issue a new Warrant of like
denomination, tenor and date.
3.3 OTHER NOTICES. In case at any time:
(a) The Trust shall declare dividends payable in Shares or
make any liquidating distribution to the registered holders of its Shares;
(b) The Trust shall offer any additional Shares for
subscription pro rata to the registered holders of its Shares;
(c) There shall be any capital reorganization,
reclassification of the Shares, consolidations or merger of the trust with, or
sale of all or substantially all of its assets to another entity; or
(d) There shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Trust, then, in any one or more of such cases,
the Trust shall give written notice to the registered holders of the Warrants at
the address of such holders as shown on the books of the Trust of the date on
which (i) the books of the Trust shall close or a record or registered holders
of Shares shall be taken for such liquidating distribution or subscription
rights, or (ii) such reorganization, reclassification, consolidation, merger,
refinancing, sale, dissolution liquidation, or winding up shall take place, as
the case may be. Such notice shall also specify the date as of which the holders
of Shares of record shall participate in such liquidating distribution or
subscription rights, or shall be entitled to exchange their Shares for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding up, as the case may be. Such notice shall be given and published at
least 20 days prior to the action in question and not less than 20 days prior to
the record date or the date on which the Trust's transfer books are closed in
respect thereto. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of any of the matters set forth in this Section
3.3.
177
5
3.4 FORM OF WARRANT. The form of Warrant need not be changes
because of any change pursuant to this Article 3, and Warrants issued after such
change may state the same Warrant Price and the same number of Shares as is
stated in the Warrants initially issued pursuant to this Agreement. However, the
Trust may at any time in its soled discretion make any change in the form of
Warrant that the Trust may deem appropriate and that does not affect the
substance thereof; and any Warrant thereafter issued or countersigned, whether
in exchange or substitution for an outstanding Warrant or otherwise, may be in
the form as so changed.
ARTICLE 4
OTHER PROVISIONS RELATING TO RIGHTS
OF REGISTERED HOLDERS OF WARRANTS
4.1 NO RIGHTS AS SHAREHOLDER CONFERRED BY WARRANTS. A Warrant
does not entitle the holder thereof to any of the rights of a Shareholder of the
Trust.
4.2 LOST, STOLEN, MUTILATED OR DESTROYED WARRANTS. If any Warrant
is lost, stolen, mutilated, or destroyed, the Trust and the Warrant Agent may,
upon such terms as to indemnify or otherwise as they may, in their discretion,
impose upon the registered holder thereof (which shall, in the case of a
mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination, tenor, and date as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Trust, whether or not the allegedly lost, stolen, mutilated,
or destroyed Warrant shall be at any time enforceable by anyone.
4.3 RESERVATION OF SHARES. The Trust shall at all time keep
available for issuance a number of its Shares sufficient to permit the exercise
in full of all outstanding Warrants.
ARTICLE 5
TRANSFER AND EXCHANGE OF WARRANTS
5.1 The Trust will keep at the office or agency maintained
pursuant to Section 2.3 hereof a register or registers, in which, subject to
such reasonable regulations as it may prescribe, it will register all Warrants,
and the Trust hereby constitutes and appoints the Warrant Agent its Warrant
Registrar. No transfer of any Warrant shall be valid unless made upon such
register. Upon surrender for transfer of any Warrant at such office or agency,
the Trust shall execute and the Warrant Agent shall countersign and deliver, in
exchange, in the name of the transferee or transferees a new Warrant or Warrants
for a like number of Shares. The Warrants may be transferred separately from the
Shares.
All Warrants issued upon any registration of transfer or exchange
of Warrants shall be the valid obligation of the Trust, entitled to the same
benefits under this Shareholder Warrant Agreement as the Warrants surrendered
upon such registration of transfer or exchange. Every Warrant presented or
surrendered for registration of transfer or for exchange shall (if so required
by the Trust or the Warrant Agent) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Trust and the Warrant
Agent, duly executed by the holder of the Warrant or by his attorney duly
authorized in writing. No service charge shall be made for any registration of
transfer or exchange of Warrants, but the Trust may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Warrants.
Notwithstanding any terms contained in this Section 5.1 or
elsewhere in this Agreement, the Trust may refuse to transfer a Warrant pursuant
to Sections 8.6 and 8.7 of its Bylaws.
ARTICLE 6
CONCERNING THE WARRANT AGENT
6.1 PAYMENT OF TAXES. The Trust shall from time to time promptly
pay all taxes and charges that may be imposed upon the Trust or the Warrant
Agent in respect of the issuance or delivery of Shares upon the exercise of
Warrants, but the Trust shall not be obligated to pay any transfer taxes in
respect of the Warrants of such Shares.
178
6
6.2 DUTIES OF WARRANT AGENT. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, pursuant to which the Trust and the registered holders of Warrants
shall be bound:
(a) The statements contained herein and in the
Warrants shall be taken as statements of the Trust and the Warrant Agent assumes
no responsibility for the correctness of any of the same except for those that
describe the Warrant Agent or action to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrants.
(b) The Warrant Agent shall not be responsible for any
failure of the Trust to comply with any of the covenants contained in this
Agreement or in the Warrants.
(c) The Warrant Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, agents or employees and the Warrant Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys, agents or employees or for any damage to the
Trust resulting from such act, default, neglect or misconduct, provided the
Warrant Agent has exercised reasonable care in the selection and continued
employment thereof.
(d) The Warrant Agent may consult at any time with
counsel (who may be counsel for the Trust) and the Warrant Agent shall incur no
liability or responsibility to the Trust or to any holder of any Warrant in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the opinion or the advice of such counsel.
(e) The Trust agrees to pay to the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent in the
execution of this Agreement, to reimburse the Warrant Agent for all expenses,
counsel fees, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution of this Agreement and to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, losses and expenses including judgments, costs and counsel fees,
for anything done or omitted by the Warrant Agent in the execution of this
Agreement except as a result of the Warrant Agent's negligence or bad faith.
(f) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Trust, or one or more holders of Warrants
shall furnish the Warrant Agent with reasonable security and indemnity for any
cost and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without any such security or indemnity.
(g) The Warrant Agent and any stockholder, director,
officer or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Trust in accordance with applicable
requirements under the federal and state securities and other laws or become
pecuniarily interested in any transaction in which the Trust may be interested,
or contract with or lend money to the Trust or otherwise act as fully and freely
as though it were not Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Trust or
for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as
agent and in a ministerial capacity, and its duties shall be determined solely
by the provisions hereof. The Warrant Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement except
for its own negligence or bad faith.
(i) The Warrant Agent shall incur no liability or
responsibility to the Trust or to any holder of a Warrant for any action taken
in reliance on any debenture, notice, resolution, waiver, consent, order,
certificate or other paper, document or instrument believed by it in good faith
to be genuine.
(j) The Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Warrant Agent) or in
respect of the validity or execution of any Warrant (except its countersignature
thereof); nor shall the Warrant Agent by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Shares
(or any other stock or security) to be issued pursuant to this Agreement or any
Warrant or as to whether any Shares (or any other stock or security) will,
179
7
when issued, be validly issued, fully paid and nonassessable or as to the
Warrant Price, or the number or kind or amount of Shares or other securities or
other property issuable upon exercise of any Warrant.
(k) The Warrant Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from the President or Chairman of the Board or the Secretary or any
Assistant Secretary or the Treasurer or any Assistant Treasurer of the Trust,
and to apply to such officers for advice or instructions or the determination of
any matter in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with the
advice or determination or instructions of any such officer.
6.3 RESIGNATION, CONSOLIDATION OR MERGER OF WARRANT AGENT.
(a) The Warrant Agent, or any successor to it
hereafter appointed, may resign and be discharged from all further duties and
liabilities hereunder after giving notice in writing to the Trust. If the office
of the Warrant Agent becomes vacant by reason of such resignation or the
incapacity to act or otherwise, the Trust shall appoint in writing a successor
Warrant Agent in place of the Warrant Agent. The Trust shall indemnify and hold
the Warrant Agent harmless from and against all claims, expenses or causes of
action resulting from the failure of the Trust to make such appointment prior to
the effective date of resignation of the Warrant Agent.
Any resignation of the Warrant Agent for cause, or after the
failure of the Company to pay any fees or expenses due to the Warrant Agent for
a period of 30 days after the date due, shall become effective immediately. Any
resignation of the Warrant Agent for any other reason shall become effective 30
days after the date on which the Warrant Agent shall give notice of resignation
to the Trust.
Any successor Warrant Agent shall be a corporation organized and
doing business under the laws of the United States of America or of any state
therein, in good standing, authorized under applicable laws to exercise
corporate trust powers and subject to supervision or examination by federal or
state authority for not less than five (5) years preceding appointment as
successor Warrant Agent. After appointment, any successor Warrant Agent shall be
vested with all the authority, powers, rights immunities, duties and obligations
of its predecessor Warrant Agent with like effect as if originally named as
Warrant Agent hereunder, without any further act or deed; but if for any reason
it becomes necessary or appropriate, the predecessor Warrant Agent shall execute
and deliver at the expense of the Trust, an instrument transferring to such
successor Warrant Agent all the authority, powers and rights of such predecessor
Warrant Agent hereunder; and upon request of any successor Warrant Agent the
Trust shall make, execute, acknowledge and deliver any and all instruments in
writing for more fully and effectively vesting in and confirming to such
successor Warrant Agent all such authority, powers, rights, immunities, duties
and obligations. Not later than the effective date of any such appointment, the
Trust shall give notice thereof to the predecessor Warrant Agent and each
transfer agent for the Shares, and shall forthwith deliver notice of the same to
each registered holder of Warrants. Failure to give such notice, or any defect
therein, shall not affect the validity of the appointment of the successor
Warrant Agent. Any corporation into which the Warrant Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Warrant Agent under
the provisions of this subsection (a).
(b) In case at the time such successor to the Warrant
Agent shall succeed to the agency created by this Agreement, any of the Warrants
shall have been countersigned but not delivered, any such successor to the
Warrant Agent may adopt the countersignature of the original Warrant Agent and
deliver such Warrants so countersigned; and in case at that time any of the
Warrants shall not have been countersigned, any successor to the Warrant Agent
may countersign such Warrants either in the name of the predecessor Warrant
Agent or in the name of the successor Warrant Agent; and in all such cases such
Warrant shall have the full force provided in the Warrants and in this
Agreement.
6.4 FEES AND EXPENSES OF WARRANT AGENT. The Trust agrees (a) that
it will pay the Warrant Agent for its services as such Warrant Agent hereunder,
compensation as set forth in the Fee Schedule attached hereto and will reimburse
the Warrant Agent upon demand for all expenditures that the Warrant Agent may
reasonably incur in the execution of its duties hereunder; and (b) that it will
perform, execute, acknowledge and deliver or cause to be performed, executed,
180
8
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Warrant Agent for the carrying
out or performing of the provisions of this Agreement.
6.5 MODIFICATION OF THIS AGREEMENT. The Warrant Agent may,
without the consent or concurrence of the registered holders of the Warrants, by
supplemental agreement or otherwise, concur with the Trust in making any changes
or corrections in this Agreement that it shall have been advised by counsel (who
may be counsel for the Trust) are required to cure any ambiguity or to correct
any defective or inconsistent provision or clerical omission or mistake or
manifest error herein contained.
6.6 REPLACEMENT OF WARRANT AGENT. The Trust may terminate its
Agreement with the Warrant Agent and appoint a substitute Warrant Agent at any
time on 30 days' advance notice to the Warrant Agent and the Warrant Agent may
terminate this Agreement with the Trust at any time on 30 days advance notice to
the Trust.
6.7 SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Trust and the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
ARTICLE 7
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE TRUST
7.1 The Trust represents and warrants to the Warrant Agent that:
(a) It has a satisfactory number of Shares available
for issuance upon the exercise of the Warrants, and covenants and agrees that it
will, at all times, cause to be available and free from pre-emptive rights, out
of its authorized but unissued Shares such number of Shares as shall be required
to be issued by it from time to time upon the exercise of the Warrants, in
accordance with their terms and the terms of this Agreement, and the transfer
agent for any Shares and every subsequent transfer agent for any Shares of the
Trust issuable upon the exercise of any of the Warrants are hereby irrevocably
authorized and directed at all times to keep available such number of authorized
and unissued shares as shall be requisite for such purpose. The Trust agrees
that all Shares issued upon exercise of the Warrants shall be, at the time of
delivery of the certificate for such Shares, validly issued, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof.
(b) The Trust has filed or will have filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-11 for the registration under the Securities Act of 1933 (the "Act")
of the Warrants and Shares issuable pursuant to the exercise thereof. Before
such registration statement shall become effective, the Trust will file with the
Commission one or more amendments thereto. Such registration statement,
including all exhibits thereto, and the final prospectus, included therein, each
as amended at the time such registration statement became effective and as
further amended or supplemented, from time to time, is hereinafter called the
"Registration Statement" and the "Prospectus," respectively.
(c) With respect to the Trust's Registration Statement
as described in (b) above, the Commission has not issued any order preventing or
suspending its use and the Prospectus conforms in all material respects to the
requirements of the Securities Act of 1933 (the "Act") and the rules and
regulations of the Commission thereunder and does not include any incorrect
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and since the
respective dates as of which information is given in the Registrations Statement
and the Prospectus, there has not been any material adverse change in the
general affairs, management, financial position, shareholders' equity or results
of operations of the Trust and its subsidiaries, other than as set forth or
contemplated in the Prospectus. The Trust will use its best efforts to keep the
Registration Statement in effect as required by the Act for the duration of the
Exercise period of the Warrants.
181
9
ARTICLE 8
OTHER MATTERS
8.1 NOTICES AND DEMANDS TO TRUST AND WARRANT AGENT. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the registered holder of any Warrant to or on the Trust shall be sufficiently
given or made if sent by first class or registered mail, postage prepaid,
addressed (until another address is filed in writing by the Trust with the
Warrant Agent) as follows:
CAPITAL ALLIANCE INCOME TRUST LTD.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any notice or demand authorized by this Agreement to be given or
made by the registered holder of any Warrant or by the Trust to or on the
Warrant Agent shall be sufficiently given or made if sent by first class or
registered mail, postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with the Trust), as follows:
CAPITAL ALLIANCE ADVISORS, INC.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
8.2 APPLICABLE LAW. The validity, interpretation and performance
of this Agreement and of the Warrants shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts made
and wholly performed in such state.
8.3 PERSONS HAVING RIGHTS UNDER THIS AGREEMENT. Nothing expressed
in this Agreement and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed to confer upon, or give to, any person
or corporation other than the parties hereto and the registered holders of
Warrants any right, remedy or claim under or by reason of this Agreement or of
any covenant, warranty, condition, stipulation, promise, or agreement therein,
and all covenants, warranties, conditions, stipulations, promises and agreements
in this Agreement contained shall be for the sole and exclusive benefit of the
parties hereto and the successors of the registered holders of Warrants.
8.4 EXAMINATION OF THIS AGREEMENT AND OF THE WARRANTS. A copy of
this Agreement shall be available at all reasonable times at the corporate trust
office of the Warrant Agent for inspection by the registered holder of any
Warrant. The Warrant Agent may require any such registered holder to submit his
Warrant for inspection by it.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
182
10
8.5 EFFECT OF HEADINGS. The Article and Section headings herein
are for convenience only and are not part of this Agreement and shall not affect
the interpretation thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
TRUST:
CAPITAL ALLIANCE INCOME TRUST LTD.,
A Real Estate Investment Trust
By:
-------------------------------
Its:
-------------------------------
Attest:
------------------------------
AGENT:
CAPITAL ALLIANCE ADVISORS, INC.
By:
-------------------------------
Its:
-------------------------------
Attest:
------------------------------
183
11
(EXHIBIT A)
CAPITAL ALLIANCE INCOME TRUST
(This Warrant will be void after ________________, 2000)
This Warrant Certificate certifies that ________________________
_________________________, or registered assigns, is the registered holder of a
Warrant or Warrants expiring _______________________ 19___ (the "Warrant") to
purchase one Share of Common Stock, without par value ("Shares") of Capital
Alliance Income Trust, a Real Estate Investment Trust, a Delaware corporation
(the "Trust") for each Warrant evidenced by this Warrant Certificate. The
Warrant entitles the holder thereof to purchase from the Trust, at any time
after 24 months following the effective date of the Trust's initial public
offering of Common Stock, and before expiration thereof 24 months after such 24
months expires, such number of Shares of the Trust at the price of $5.60 per
Share, upon surrender of this Warrant Certificate and payment of the Warrant
Price at the office or agency of the Warrant Agent, Capital Alliance Advisors,
Inc., but only subject to the conditions set forth herein and in the Shareholder
Warrant Agreement referred to on the reverse hereof. The Warrant Price and the
number of Shares purchasable hereunder are subject to adjustment upon the
occurrence of certain events set forth in the Shareholder Warrant Agreement. The
term Warrant Price as used in this Warrant Certificate refers to the price per
Share at which Shares may be purchased pursuant to the Warrant at the time the
Warrant is exercised.
The Shareholder Warrant Agreement provides that upon the
occurrence of certain events the Warrant Price and the number of Warrant Shares
purchasable hereunder, set forth on the face hereof may, subject to certain
conditions, be adjusted. No fraction of a Share will be issued upon any exercise
of a Warrant, but the person entitled to such fractional interest shall, as
provided in the Shareholder Warrant Agreement, upon exercise of the Warrant, be
entitled to a cash payment for such fractional interest equal to the current
market value of such fractional interest, determined in accordance with the
provisions of the Shareholder Warrant Agreement.
Upon any exercise of the Warrant for less than the total number
of full shares provided for herein, there shall be issued to the registered
holder hereof or his assignee a new Warrant Certificate, if requested by the
holder, covering the number of Shares for which the Warrant has not been
exercised, otherwise the Warrants will be issued in uncertificated form.
Warrant Certificates, when surrendered at the office or agency of
the Warrant Agent by the registered holder hereof in person or by attorney duly
authorized in writing, may be exchanged in the manner and subject to the
limitations provided in the Shareholder Warrant Agreement, but without payment
of any service charge, for another Warrant Certificate or Warrant Certificates
of like tenor and evidencing in the aggregate a like number of Warrants.
Upon due presentment for registration of transfer of the Warrant
Certificate at the office or agency of the Warrant Agent, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants, if requested, shall be issued to the
transferee in exchange for this Warrant Certificate, subject to the limitations
provided in the Shareholder Warrant Agreement, without charge except for any
applicable tax or other governmental charge. Otherwise, such Warrants will be
issued in uncertificated form.
Notwithstanding anything contained in the Warrant or the
Shareholder Warrant Agreement, the Trust may refuse the exercise of the Warrant
pursuant to Sections 8.5, 8.6 and 8.7 of the Bylaws.
The Trust and the Warrant Agent may deem and treat the registered
holder as the absolute owner of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, of any distribution to the registered holder, and for
all other purposes, and neither the Trust nor the Warrant Agent shall be
affected by any notice to the contrary.
This Warrant does not entitle the registered holder to any of the
rights of a Shareholder of the Trust.
184
12
REVERSE SIDE OF EXHIBIT A - SHAREHOLDER'S WARRANT AGREEMENT
The Warrant evidenced by this Warrant Certificate is part of a
duly authorized issue of Warrants expiring at 5:00 p.m. Pacific Time,
___________________, 19____, to purchase up to and including one Share, $.01 par
value, of the Trust, and is issued pursuant to a Shareholder Warrant Agreement
dated as of ________________, 1996 (the "Shareholder Warrant Agreement"), duly
executed and delivered by the Trust to Capital Alliance Advisors, Inc. (the
"Warrant Agent"), which Shareholder Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Trust and the holders, the words
"holders" or "holder" meaning the registered holders or registered holder of
Warrants.
Warrants may be exercised to purchase Shares from the Trust on or
after 24 months following the effective date of the Trust's initial public
offering, and on or before ______________, 1999 (24 months thereafter) at the
Warrant Price set forth on the face hereof, subject to adjustment in certain
events. The holder of the Warrant evidence by this Warrant Certificate may
exercise it by surrendering this Warrant Certificate, with the form of election
to purchase set forth hereon properly completed and executed, together with
payment of the Warrant Price at the office or agency of the Warrant Agent,
Capital Alliance Advisors, Inc., ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Warrant Price shall be paid by cash or bank
check.
185
13
FORM OF SUBSCRIPTION
[TO BE SIGNED ONLY UPON EXERCISE OF WARRANT]
To _____________________:
The undersigned hereby irrevocably elects to exercise Warrant(s)
represented by this Warrant Certificate, and to purchase the Shares issuable
upon exercise of such Warrants, and requests that certificates for such Shares
shall be issued in the name of, and cash for any fractional shares paid to,
_________________ whose address is _______________________.
By checking this box [ ], the undersigned requests that the
Shares be issued in Certificate form.
Dated:__________, 19____
_________________________________________________________
(Signature must conform in all respects to name of holder as
specified on the fact of the Warrant)
_________________________________________________________
Address
_________________________________________________________
FORM OF ASSIGNMENT
[TO BE SIGNED ONLY UPON TRANSFER OF WARRANT]
For value received, the undersigned hereby sells, assigns and
transfers unto _____________ Warrants represented by the within Warrant
Certificate, together with all right, title and interest therein, and do hereby
irrevocably constitute and appoint Capital Alliance Advisors, Inc., Attorney to
transfer said Warrants on the books of the within-named Trust, with full power
of substitution in the premises.
Dated:__________, 19____
________________________________________________________
(Signature must conform in all respects to name of holder as
specified on the fact of the Warrant)
186