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XXXXXXX RENTCORP
Registration Statement on Form S-8
EXHIBIT 4.2
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XXXXXXX RENTCORP
1998 STOCK OPTION PLAN
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
This Option Agreement is being entered into as of ___________, 1998, by
and between XxXxxxx RentCorp, a California corporation (hereinafter "XXXXXXX")
and XXXX XXX (hereinafter "XXXX"). In accordance with that certain XxXxxxx
RentCorp 1998 Stock Option Plan (the "PLAN"), the Board of Directors of XXXXXXX
granted an option on __________, 1998 to XXXX to purchase shares of its Common
Stock, as evidenced by this Agreement, subject to the following terms:
1. NUMBER OF SHARES AND PRICE. XXXXXXX hereby evidences its grant to
XXXX of the right and option (hereinafter the "OPTION"), on the terms and
conditions set forth herein, to purchase all or any part of an aggregate of ____
Thousand (________) shares of XXXXXXX'x Common Stock (hereinafter the "OPTION
SHARES"), at a purchase price of _______ Dollars and ______ Cents ($_____) per
share.
2. OPTION SUBJECT TO PLAN. This OPTION is subject to, and XXXXXXX and
XXXX agree to be bound by, all of the terms and conditions of the PLAN, which is
made a part hereof and incorporated herein by this reference. XXXX acknowledges
receipt of the copy of the PLAN. The rights of XXXX under this OPTION are
subject to modification and termination in certain events as provided in the
PLAN, including, without limitation, Section 3 thereof.
3. NATURE OF OPTION; TAX CONSEQUENCES. This OPTION is intended to be an
"incentive stock option" as that term is defined under Section 422 of the
Internal Revenue Code. XXXX should consult with his own tax advisor with regard
to the income tax consequences to him of exercising this OPTION.
4. TERMS OF EXERCISE.
4.1 Option Period. Notwithstanding anything to the contrary in
this Agreement, unless this OPTION shall have expired earlier in accordance with
Section 5 below, this OPTION shall expire ten (10) years after the date of grant
specified above at 5:00 p.m. Livermore, California local time on ________, 2008
(hereinafter the "OPTION PERIOD").
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4.2 Installments. This OPTION shall be exercisable in
installments as to twenty percent (20%) of the OPTION SHARES one (1) year after
the date of grant specified above (__________, 1998), and shall become
exercisable as to an additional five percent (5%) of the OPTION SHARES after
each successive period of three calendar months thereafter. OPTION SHARES
entitled to be purchased, but not purchased in any period, may be purchased at
any subsequent time within the OPTION PERIOD.
4.2.1 In the event XXXX takes a leave of absence approved
by XXXXXXX, the vesting of this OPTION (i.e., the rate at which the installments
become exercisable) shall be tolled (i.e., held in abeyance) during such leave
of absence. This may result in the OPTION PERIOD expiring prior to the full
vesting of all OPTION SHARES, in which case unvested OPTION SHARES shall be
forfeited and XXXX shall have no further right to purchase such unvested shares.
4.2.2 In the event of a reduction in hours scheduled to be
worked by XXXX, the rate of vesting thereafter of this OPTION (i.e., the rate at
which the installments become exercisable) shall be reduced proportionately to
the reduction in hours, unless otherwise provided by XXXXXXX. This may result in
the OPTION PERIOD expiring prior to the full vesting of all OPTION SHARES, in
which case unvested OPTION SHARES shall be forfeited and XXXX shall have no
further right to purchase such unvested shares.
4.2.3 In the event of a substantial reduction in XXXX's
duties and responsibilities hereafter, XXXXXXX and XXXX may mutually agree in
writing to a reduction in the number of OPTION SHARES and/or a reduction in the
rate of vesting of this OPTION.
4.2.4 The vesting of this OPTION (i.e., the rate at which
the installments become exercisable) may be accelerated under certain
circumstances as described in Sections 6.2 and 6.3 below.
4.3 How to Exercise. The exercise of this OPTION shall be
effective only upon the delivery to XXXXXXX of a written notice of intention to
exercise the OPTION in substantially the form attached hereto as Exhibit A
specifying the number of shares then to be purchased under the OPTION and the
date of such purchase (which, unless XXXXXXX otherwise consents, shall be at not
more than thirty (30) days after the delivery of such notice). Delivery of a
certificate, or certificates, representing said shares shall be made only upon
the tender of payment of the purchase price of the number of shares specified in
such notice on said date.
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4.4 Payment of Exercise Price. Payment of the purchase price
for the shares purchased upon exercise of the OPTION shall be made in cash or by
check; provided that, subject to the discretion of the Board of Directors of
XXXXXXX, and upon receipt of all regulatory approvals, all or part of the
payment may be made by the delivery of certificates evidencing Common Stock of
XXXXXXX already owned by XXXX with an aggregate "fair market value" (determined
as specified in the PLAN) equal to the portion of the purchase price being paid
thereby.
5. EARLY TERMINATION OF THE OPTION PERIOD.
5.1 Termination of Employment. Subject to Sections 5.2 and 5.3
below, if XXXX ceases to be employed by XXXXXXX or its subsidiaries for any
reason, XXXX may exercise this OPTION only to the extent XXXX was entitled to
exercise it on the date he ceased to be so employed (subject to Section 6.3
below). If XXXX wants to exercise this OPTION, then he must do so before the
earlier of (i) three (3) months after the date he ceases to be an employee of
XXXXXXX or its subsidiaries or (ii) the normal expiration of the OPTION PERIOD
(as specified in Section 4.1 above); and upon the expiration of the earlier of
such two periods, this OPTION shall terminate.
5.1.1 Neither service as a director, consultant, advisor
or other service provider by XXXX, nor the payment of a director's,
consultant's, advisor's or other fee by XXXXXXX, shall be sufficient to
constitute continued "employment" of XXXX by XXXXXXX with respect to this
OPTION.
5.1.2 XXXX's employment shall not be deemed to have
terminated by reason of a transfer between XXXXXXX, its parent, any subsidiary,
or any successor.
5.1.3 XXXX's employment shall not be deemed to have
terminated by reason of a leave of absence approved by XXXXXXX. If re-employment
upon expiration of the leave of absence approved by XXXXXXX is not guaranteed by
statute or contract, this OPTION shall cease to be treated as an "incentive
stock option" after the first four months of such leave and thereafter shall be
treated for tax purposes as a "non-qualified option."
5.1.4 XXXX's employment with XXXXXXX shall not be deemed
to have terminated by reason of a reduction in hours scheduled to be worked if
approved by an officer of XXXXXXX.
5.1.5 XXXX's employment with XXXXXXX shall not be deemed
to have terminated by reason of a reduction in XXXX's duties or responsibilities
with respect to XXXXXXX.
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5.2 Disability. Subject to Section 5.3 below, if XXXX's
employment by XXXXXXX or its subsidiaries, if any, is terminated as a result of
XXXX's disability, XXXX may exercise this OPTION if and only to the extent XXXX
was entitled to exercise it at the date he ceased to be so employed, but only
during the OPTION PERIOD and within twelve (12) months after the date XXXX
ceases to be an employee of XXXXXXX, or its subsidiaries, if any. Upon the
expiration of the earlier of such twelve (12) month period or the normal OPTION
PERIOD, this OPTION shall terminate. For purposes of this OPTION, an individual
is disabled if he is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.
5.3 Death. In the event of XXXX's death while employed by
XXXXXXX, or its subsidiaries, if any, and during the OPTION PERIOD, the
unexercised portion of this OPTION may be exercised at any time during the
OPTION PERIOD but not more than twelve (12) months after the date of XXXX's
death, by the person or persons to whom the rights to exercise this OPTION shall
pass by will or by the applicable laws of descent and distribution, but only to
the extent that the right to exercise had accrued and was still exercisable as
of the date of XXXX's death. Upon the expiration of the earlier of such twelve
(12) month period or the normal OPTION PERIOD, this OPTION shall terminate.
5.4 Corporate Dissolution. A dissolution or liquidation of
XXXXXXX shall cause this OPTION to terminate; provided that XXXX shall, in such
event, be given at least thirty (30) days prior written notice of such event
(which notice, if mailed, shall be deemed given at the time of mailing) and
shall have the right until such event to exercise this OPTION to the extent then
exercisable (subject to Section 2.10 of the PLAN and the limitation set forth in
Section 422 of the Internal Revenue Code of 1986, as amended); provided further
that the Board of Directors may, in its discretion (to the extent permitted by
Section 2.10 of the PLAN and the limitation set forth in Section 422 of the
Internal Revenue Code of 1986, as amended), in the event of any such dissolution
or liquidation, accelerate the accrual of exercise rights hereunder in such
manner as the Board of Directors shall deem appropriate.
6. RECAPITALIZATION; ACQUISITION; CHANGE IN CONTROL.
6.1 Recapitalization. Subject to any action by the
stockholders required by law, the number of shares of Common Stock covered by
this OPTION and the price per share thereof shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock of
XXXXXXX resulting from a subdivision or consolidation of shares or the payment
of a stock
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dividend (but only on the Common Stock) or any other increase in the number of
such shares effected without receipt of consideration by XXXXXXX. (For this
purpose, issuances of shares upon conversion of convertible securities shall be
deemed an issuance for which XXXXXXX receives consideration.)
6.2 Acquisition. In the event of any acquisition of XXXXXXX
the acquiror may, at its option, (i) assume this OPTION if and to the extent
then outstanding, or (ii) substitute for this OPTION a new option under one of
its own option plans provided such new option is no less economically beneficial
to XXXX. If the acquiror does not assume this OPTION or substitute its own
option for this OPTION, then the accrual of exercise rights hereunder shall
accelerate such that this OPTION shall be fully vested and all OPTION SHARES
shall be exercisable as of the date of such acquisition. For purposes of this
section, an acquisition of XXXXXXX shall be defined to be (i) any merger or
consolidation of XXXXXXX in which the shareholders of XXXXXXX immediately prior
to such merger or consolidation do not immediately thereafter hold a majority of
the voting power of the resulting entity, or (2) a transaction in which XXXXXXX
sells all or substantially all of its assets and the employees of XXXXXXX
continue to be employed by the purchasing entity.
6.3 Change in Control. In the event XXXX's employment with
XXXXXXX or its successor, or any of their subsidiaries, is terminated (other
than by XXXX), within two (2) years following a "Change in Control," the accrual
of exercise rights hereunder shall accelerate upon such termination such that
this OPTION shall be fully vested and all OPTION SHARES shall be exercisable.
For purposes of this section, a "Change in Control" shall be deemed to have
occurred hereafter if:
6.3.1 Any person (or entity, or group or persons or
entities), other than (i) a trustee or other fiduciary holding
securities under an employee benefit plan of XXXXXXX or (ii) a
corporation owned directly or indirectly by the stockholders of XXXXXXX
in substantially the same proportions as their ownership of stock of
XXXXXXX or (iii) a group which includes Xxxxxx X. XxXxxxx or his heirs,
becomes the beneficial owner, directly or indirectly, of securities of
XXXXXXX representing 30% or more of the total voting power represented
by XXXXXXX'x then outstanding voting securities; or
6.3.2 During any period of two consecutive years
after the date of this OPTION (or if two years have not elapsed since
the date of this OPTION, such shorter period), (i) individuals who at
the beginning of such period constitute the Board, plus (ii) any new
director whose election by the Board or nomination for election by
XXXXXXX'x stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for
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election was previously so approved, cease for any reason to constitute
a majority thereof; or
6.3.3 XXXXXXX is a party to a merger or consolidation
with another corporation, other than a merger or consolidation which
results in the voting securities of XXXXXXX outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity) a
majority of the total voting power of the surviving entity outstanding
immediately after such merger or consolidation; or
6.3.4 XxXxxxx sells or otherwise disposes (in one
transaction or a series of transactions) of all or substantially all of
its assets, other than to a corporation owned directly or indirectly by
the stockholders of XXXXXXX in substantially the same proportions as
their ownership of stock of XXXXXXX.
7. INVESTMENT INTENT.
7.1 Applicability of this Section. This Section 7 shall be
applicable only at such times as (i) the OPTION SHARES are not covered by a
currently effective registration statement under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), or (ii) XXXX may be deemed to be an affiliate of
XXXXXXX RENTCORP.
7.2 Xxxx's Representations. As a condition to accepting this
OPTION, and as a condition to its exercise, XXXX makes the following
representations and agreements, and represents, warrants and agrees that he will
reaffirm such representations and agreements to be true and in full force and
effect at and as of the time of any exercise of this OPTION:
7.2.1 XXXX has, by reason of XXXX's business or
financial experience, the capacity to evaluate the merits and risks of
an investment in XXXXXXX and to protect his interest in connection with
the issuance of this OPTION and the purchase of any OPTION SHARES.
7.2.2 XXXX is aware of XXXXXXX'x business affairs and
financial condition and has had access to such information about
XXXXXXX as XXXX has deemed necessary or desirable to reach an informed
and knowledgeable decision to acquire this OPTION and the OPTION
SHARES. XXXX will purchase the OPTION SHARES for investment for his own
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account only and not with a view to, or for resale in connection with,
any "distribution" thereof within the meaning of the Securities Act of
1933.
7.2.3 XXXX understands that this OPTION and the
OPTION SHARES have not been registered under the SECURITIES ACT by
reason of a specific exemption therefrom, which exemption depends upon,
among other things, the bona fide nature of his investment intent as
expressed herein. In this connection, XXXX understands that, in the
view of the Securities and Exchange Commission ("COMMISSION"), the
statutory basis for such exemption may not be present if XXXX's
representation meant that his present intention was to hold the OPTION
SHARES for a minimum capital gains period under the tax statutes, for a
deferred sale, for a market rise, for a sale if the market does not
rise, or for a year or any other fixed period in the future.
7.2.4 XXXX further acknowledges and agrees that the
OPTION SHARES must be held indefinitely unless they are subsequently
registered under the SECURITIES ACT or an exemption from such
registration is available. XXXX further acknowledges and understands
that XXXXXXX is under no obligation to register the OPTION SHARES.
7.2.5 XXXX is aware of the adoption of Rule 144 by
the COMMISSION, promulgated under the SECURITIES ACT, which (1) after
one year from the date the securities have been purchased and fully
paid for, permits limited public resale of securities acquired in a
non-public offering subject to the satisfaction of certain conditions,
and (ii) after two years from the date the securities have been
purchased and fully paid for, permits persons who are not affiliates of
the issuer to sell an unlimited number of securities without
satisfaction of such conditions.
7.2.6 XXXX further acknowledges and understands that
XXXXXXX may not be satisfying the current public information
requirement of Rule 144 at the time he wishes to sell the OPTION
SHARES, and, if so, XXXX would be precluded from selling the OPTION
SHARES under Rule 144 even if the one or two-year minimum holding
periods had been satisfied.
7.2.7 XXXX further acknowledges that in the event all
of the requirements of Rule 144 are not met, compliance with Regulation
A or some other exemption from registration will be required, and that
although Rule 144 is not exclusive, the Staff of the COMMISSION has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and other than pursuant
to Rule 144 will have
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a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales and that such
persons and the brokers who participate in the transactions do so at
their own risk.
7.3 Legends. XXXXXXX may place on the certificates evincing
the OPTION SHARES appropriate legends referring to the restrictions on transfer
set forth in Section 7.2 above and as may be required by the California
Commissioner of Corporations. XXXX understands that all certificates for OPTION
SHARES may bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR THE
PURCHASER'S OWN ACCOUNT ONLY AND NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF. NO SALE OR DISPOSITION OF
THESE SHARES MAY BE EFFECTED WITHOUT (1) REGISTRATION OF SUCH SALE OR
DISPOSITION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND (2)
QUALIFICATION OF SUCH SALE OR DISPOSITION UNDER THE CALIFORNIA
CORPORATE SECURITIES LAW OF 1968, AS AMENDED, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION
ARE NOT REQUIRED UNDER THOSE ACTS.
8. EMPLOYMENT RIGHTS NOT CONFERRED. This OPTION shall not confer upon
XXXX any right with respect to continuation of employment by XXXXXXX or its
subsidiaries, nor shall it interfere in any way with XXXX's right or XXXXXXX'x
(or its subsidiaries') right to terminate XXXX's employment at any time.
9. NON-TRANSFERABLE. The OPTION evinced by this Agreement is not
transferable otherwise than by will or by the laws of descent and distribution
and shall be exercisable during XXXX's lifetime only by XXXX or XXXX's duly
appointed guardian or personal representative. Subject to the foregoing, this
Agreement shall be binding upon and shall inure to the benefit of any successors
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or assigns of XXXXXXX and, to the extent herein provided, shall be binding upon
and inure to the benefit of XXXX's successors.
XXXXXXX RENTCORP
By
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Xxxxxx X. Xxxxxxx, President
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XXXX XXX
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EXHIBIT A
To: McGRATH RENTCORP
0000 Xxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Subject: Notice of Intention to Exercise Stock Option
With respect to the stock option granted to Xxxx Xxx on ____________,
1998 to purchase an aggregate of ____________Thousand (_______) shares of
XXXXXXX'x Common Stock as evinced by the Employee Incentive Stock Option
Agreement dated ____________, 1998, this is official notice that the undersigned
intends to exercise such option to purchase shares as follows:
Number of Shares: _________________
Date of Purchase: _________________
Mode of Payment: _________________
___________________ [Initial here if Section 7 is applicable] In connection with
such exercise, the undersigned hereby reaffirms that the representations and
agreements set forth in Section 7.2 of the Agreement evincing such option are
now and will be at and as of the time of such exercise true and in full force
and effect with respect to the shares purchased.
The shares should be issued as follows:
Name: ________________________________________
Address: ________________________________________
________________________________________
________________________________________
Social Security Number:___________________________
Signed:________________________
Date: _______________
