GENERAL FINANCE CORPORATION
2006 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN
The purposes of the 2006 Stock Option Plan (the "Plan") of General Finance
Corporation, a Delaware corporation (the "Company"), are to:
1.1 Encourage selected employees, directors, consultants and advisers to
improve operations and increase the profitability of the Company;
1.2 Encourage selected employees, directors, consultants and advisers to
accept or continue employment or association with the Company or its Affiliates;
and
1.3 Increase the interest of selected employees, directors, consultants
and advisers in the Company's welfare through participation in the growth in
value of the common stock of the Company (the "Common Stock"). All references
herein to stock or shares, unless otherwise specified, shall mean the Common
Stock.
2. TYPES OF AWARDS; ELIGIBLE PERSONS
2.1 The Administrator (as defined below) may, from time to time, take the
following action, separately or in combination, under the Plan: (a) grant
options intended to satisfy the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder (the "Code"),
as "incentive stock options ("ISOs") and (b) grant options not intended to be
ISOs, so-called "non-qualified options" ("NQOs," and together with ISOs,
"Options"). Any such grants may be made to employees, including employees who
are officers or directors, and to individuals described in Section 1 of the Plan
who the Administrator believes have made or will make a contribution to the
Company or any Affiliate (as defined below); provided, however, that only a
person who is an employee of the Company or any Affiliate at the date of the
grant of an Option is eligible to receive ISOs under the Plan.
2.2 For purposes of the Plan: (a) the term "Affiliate" means a parent or
subsidiary corporation as defined in the applicable provisions (currently
Sections 424(e) and (f), respectively) of the Code; (b) the term "employee"
includes an officer or director who is an employee of the Company; (c) the term
"consultant" includes persons employed by, or otherwise affiliated with, a
consultant; and (iv) the term "adviser" includes persons employed by, or
otherwise affiliated with, an adviser.
2.3 Except as otherwise expressly set forth in the Plan, no right or
benefit under the Plan shall be subject in any manner to anticipation,
alienation, hypothecation, or charge, and any such attempted action shall be
void. No right or benefit under the Plan shall in any manner be liable for or
subject to debts, contracts, liabilities, or torts of any Grantee or any other
person except as otherwise may be expressly required by applicable law.
3. STOCK SUBJECT TO THE PLAN; MAXIMUM NUMBER OF GRANTS
3.1 Subject to the provisions of Section 3.2, the total number of shares
of Common Stock that may be issued under the Plan shall not exceed 1,500,000
shares. The shares subject to an Option granted under the Plan that expire,
terminate or are cancelled unexercised shall become available again for grants
under the Plan. Where the exercise price of an Option is paid by means of the
Grantee's surrender of previously owned shares of Common Stock or the Company's
withholding of shares otherwise issuable upon exercise of the Option as may be
permitted in the Plan, only the net number of shares issued and which remain
outstanding in connection with such exercise shall be deemed "issued" and no
longer available for issuance under the Plan. No eligible person shall be
granted Options during any twelve-month period covering more than 300,000
shares.
3.2 If the Common Stock is changed by reason of a stock split, reverse
stock split, stock dividend, recapitalization, combination or reclassification,
then the number and class of shares of stock subject to the Plan that may be
issued under the Plan, and the maximum number of shares covered by Options to
any eligible person under Section 3.1, shall be proportionately adjusted
(provided that any fractional share resulting from such adjustment shall be
disregarded).
4. ADMINISTRATION
4.1 The Plan shall be administered by the Board of Directors of the
Company (the "Board") or by a committee (the "Committee") to which the Board has
delegated administration of the Plan (or of part thereof) (in either case, the
"Administrator"). The Board shall appoint and remove members of the Committee in
its discretion in accordance with applicable laws. At the Board's discretion,
the Committee may be comprised solely of "non-employee directors" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or "outside directors" within the meaning of Section 162(m) of
the Code. The Administrator may delegate non-discretionary administrative duties
to such employees of the Company as the Administrator deems proper.
Notwithstanding the delegation of administration of the Plan by the Board to a
Committee, the Board, in its absolute discretion, may at any time and from time
to time exercise any and all rights and duties of the Administrator under the
Plan.
4.2 Subject to the other provisions of the Plan, the Administrator shall
have the authority, in its discretion: (a) to grant Options; (b) to determine
the fair market value of the shares of Common Stock subject to Options; (c) to
determine the exercise price of Options granted, which shall be no less than the
fair market value of the Common Stock on the date of grant; (d) to determine the
persons to whom, and the time or times at which, Options shall be granted, and
the number of shares subject to each Option; (e) to construe and interpret the
terms and provisions of the Plan and all Options granted under the Plan; (f) to
prescribe, amend, and rescind rules and regulations relating to the Plan; (g) to
determine the terms and provisions of each Option granted (which need not be
identical), including but not limited to, the time or times at which Options
shall be exercisable; (h) with the consent of the Grantee, to rescind any grant
or exercise of an Option; (i) to modify or amend the terms of any Option (with
the consent of the Grantee if the modification or amendment is adverse to the
Grantee); (j) to accelerate or defer (with the consent of the Grantee) the
exercise date of any Option; (k) to authorize any person to execute on behalf of
the Company any instrument evidencing the grant of an Option; (l) to determine
the duration and purposes of leaves of absence which may be granted to
participants without constituting a termination of their employment for the
purposes of the Plan; and (m) to make all other determinations deemed necessary
or advisable for the administration of the Plan and any applicable Option. The
Administrator may not reduce the exercise price of any outstanding Option.
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4.3 All questions of interpretation, implementation, and application of
the Plan or any Option or Option agreement shall be determined by the
Administrator, which determination shall be final and binding on all persons.
5. GRANTING OF OPTIONS; AGREEMENTS
5.1 No Options shall be granted under the Plan after 10 years from the
date of adoption of the Plan by the Board.
5.2 Each Option shall be evidenced by a written agreement, in form
satisfactory to the Administrator, executed by the Company and the person to
whom such grant is made ("Grantee," which term shall include the permitted
successors and assigns of the Grantee with respect to the Option). In the event
of a conflict between the terms or conditions of an agreement and the terms and
conditions of the Plan, the terms and conditions of the Plan shall govern.
5.3 Each Option agreement shall specify whether the Option it evidences is
an NQO or an ISO, provided, however, all Options granted under the Plan to
non-employee directors, consultants and advisers of the Company are intended to
be NQOs.
5.4 Subject to Section 6.2.3 with respect to ISOs, the Administrator may
approve the grant of Options under the Plan to persons who are expected to
become employees, directors, consultants or advisers of the Company, but are not
employees, directors, consultants or advisers at the date of approval.
5.5 For purposes of the Plan, the term "employment" shall be deemed to
include service as an employee, director, consultant or adviser.
6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under the Plan shall be subject to the terms and
conditions set forth in Section 6.1. ISOs shall also be subject to the terms and
conditions set forth in Section 6.2.
6.1 Terms and Conditions to Which All Options Are Subject. All Options
granted under the Plan shall be subject to the following terms and conditions:
6.1.1 Exercise Price. The exercise price of each Option shall be the
amount determined by the Administrator, but shall not be less than the fair
market value of the Common Stock on the date of grant (determined under Section
6.1.9).
6.1.2 Time of Option Exercise (Vesting). Subject to Section 6.2.4,
an Option granted under the Plan shall be exercisable (a) immediately as of the
effective date of the applicable agreement or (b) in accordance with a schedule
or performance criteria as may be set by the Administrator and specified in the
applicable agreement. However, in no case may an Option be exercisable until the
Company and the Grantee execute a written agreement in form and substance
satisfactory to the Company.
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6.1.3 Grant Date. The date of grant of an Option under the Plan
shall be the date approved by the Administrator or a future date specified by
the Administrator at the time of approval and reflected as the effective date of
the applicable agreement.
6.1.4 Non-Transferability of Rights. Except with the express written
approval of the Administrator, which approval the Administrator is authorized to
give only with respect to NQOs, no Option granted under the Plan shall be
assignable or otherwise transferable by the Grantee except by will or by the
laws of descent and distribution. During the life of the Grantee, an Option
shall be exercisable only by the Grantee or permitted transferee.
6.1.5 Payment. Except as provided below, payment in full, in cash,
shall be made for all Common Stock purchased at the time written notice of
exercise of an Option is given to the Company and the proceeds of any payment
shall be considered general funds of the Company. The Administrator in its
discretion may include in any Option agreement, or separately approve in
connection with the exercise of any Option, any one or more of the following
additional methods of payment (subject to applicable law):
(a) Acceptance of the Grantee's full recourse promissory note
for all or part of the Option price, payable on such terms and bearing such
interest rate as determined by the Administrator (but in no event less than the
minimum interest rate specified under the Code at which no additional interest
or original issue discount would be imputed), which promissory note may be
either secured or unsecured in such manner as the Administrator shall approve
(including, without limitation, by a security interest in the shares of the
Company);
(b) Delivery by the Grantee of shares of Common Stock already
owned by the Grantee for all or part of the Option price, provided the fair
market value of such shares of Common Stock is equal on the date of exercise to
the Option price, or such portion thereof as the Grantee is authorized to pay by
delivery of such stock;
(c) Through the surrender of shares of Common Stock then
issuable upon exercise of the Option, provided the fair market value (determined
as set forth in Section 6.1.9) of such shares of Common Stock is equal on the
date of exercise to the Option price, or such portion thereof as the Grantee is
authorized to pay by surrender of such stock; and
(d) By means of so-called cashless exercises through a
securities broker to the extent exercise in such manner does not violate
applicable law or regulation (including the Exchange Act and rules and
regulations of the Securities and Exchange Commission).
6.1.6 Termination of Employment. Unless otherwise provided in the
applicable agreement, if for any reason a Grantee ceases to be employed by the
Company or any of its Affiliates, Options held by the Grantee at the date of
termination of employment (to the extent then exercisable) may be exercised in
whole or in part at any time (but in no event after the Expiration Date) within
one year of the date of termination in the case of termination by reason of
death or disability; at the commencement of business on the date of a
termination for "cause" (as defined in the applicable agreement or in any
agreement with the Company pertaining to employment); and, in all other cases,
within 90 days of the date of termination. For purposes of this Section 6.1.6, a
Grantee's employment shall not be deemed to terminate by reason of the Grantee's
transfer from the Company to an Affiliate, or vice versa, or sick leave,
military leave or other leave of absence approved by the Administrator, if the
period of any such leave does not exceed 90 days or, if longer, if the Grantee's
right to reemployment by the Company or any Affiliate is guaranteed either
contractually or by statute
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6.1.7 Withholding and Employment Taxes. At the time of exercise and
as a condition thereto, or at such other time as the amount of such obligation
becomes determinable, the Grantee of an Option shall remit to the Company in
cash all applicable federal and state withholding and employment taxes if
required by law. Such obligation to remit may be satisfied, if authorized by the
Administrator in its sole discretion, after considering any tax, accounting and
financial consequences, by the holder's (a) delivery of a promissory note in the
required amount on such terms as the Administrator deems appropriate, (b)
tendering to the Company previously owned shares of Common Stock or other
securities of the Company with a fair market value equal to the required amount,
or (c) agreeing to have shares of Common Stock (with a fair market value equal
to the required amount), which are acquired upon exercise of the Option,
withheld by the Company.
6.1.8 Other Provisions. Each Option granted under the Plan may
contain such other terms, provisions, and conditions not inconsistent with the
Plan as may be determined by the Administrator, and each ISO granted under the
Plan shall include such provisions and conditions as are necessary to qualify
the Option as an "incentive stock option" within the meaning of Section 422 of
the Code.
6.1.9 Determination of Fair Market Value. For purposes of the Plan,
the fair market value of Common Stock or other securities of the Company shall
be determined as follows:
(a) If the stock of the Company is listed on a securities
exchange or is regularly quoted by a recognized securities dealer, and selling
prices are reported, its fair market value shall be the closing price of such
stock on the date the value is to be determined, but if selling prices are not
reported, its fair market value shall be the mean between the high bid and low
asked prices for such stock on the date the value is to be determined (or if
there are no quoted prices for the date of grant, then for the last preceding
business day on which there were quoted prices).
(b) In the absence of an established market for the stock, the
fair market value thereof shall be determined in good faith by the
Administrator, with reference to the Company's net worth, prospective earning
power, dividend-paying capacity, and other relevant factors, including the
goodwill of the Company, the economic outlook in the Company's industry, the
Company's position in the industry, the Company's management, and the values of
stock of other corporations in the same or a similar line of business.
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6.1.10 Option Term. No Option shall be exercisable more than 10
years after the date of grant, or such lesser period of time as is set forth in
the applicable agreement (the end of the maximum exercise period stated in the
agreement is referred to in the Plan as the "Expiration Date").
6.1.11 Corporate Transactions.
(a) Except as otherwise provided in the applicable Option
agreement, in the event of a Corporate Transaction, all Options shall terminate
upon consummation of the Corporate Transaction unless the Administrator
determines that they shall survive. If the Administrator determines that
outstanding Options shall survive, and if the Company shall not be the surviving
entity in the Corporate Transaction, the Administrator shall provide that the
outstanding Options shall be assumed or an equivalent Option substituted by an
applicable successor entity or any Affiliate of the successor entity. If
outstanding Options are to terminate upon consummation of the Corporate
Transaction, any Options outstanding immediately prior to the consummation of
the Corporate Transaction shall be deemed fully vested and exercisable
immediately prior to the consummation of the Corporate Transaction (provided
that the Option has not expired by its terms and that the Grantee takes all
steps necessary to exercise the Option prior to the Corporate Transaction as
required by the agreement evidencing the Option). The Administrator shall notify
each Grantee of an outstanding Option of a proposed Corporate Transaction at
least 20 days prior thereto or as soon as may be practicable, and the exercise
of any Option by a Grantee thereafter shall be contingent upon consummation of
the Corporate Transaction unless the Grantee expressly elects otherwise with
respect to vested shares.
(b) In a Corporate Transaction in which the holders of the
Common Stock are to receive only cash in exchange for or in cancellation of
their shares of Common Stock, the Administrator may provide that, with respect
to each Option whose exercise price per share is less that the per share cash
consideration to the holders of the Common Stock that: (i) such Option shall be
deemed automatically exercised in full as of the consummation of the Corporate
Transaction; and (ii) the Grantee shall not be obligated to tender the exercise
price in connection with such exercise, but shall be entitled to a payment equal
to the number of shares that may be acquired upon exercise of the Option
multiplied by the amount by which the per share cash consideration in the
Corporate Transaction exceeds the exercise price.
(c) A "Corporate Transaction" means: (i) the direct or
indirect sale, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the properties or assets of the Company; (ii) the adoption
of a plan relating to the liquidation or dissolution of the Company; (iii) a
merger or consolidation in which the Company is not the Surviving Entity; or
(iv) a reverse merger in which the Company is the Surviving Entity, but the
shares of Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise. "Surviving Entity" means the Company if
immediately following any merger, consolidation or similar transaction, the
holders of outstanding voting securities of the Company immediately prior to the
merger or consolidation own equity securities possessing more than 50% of the
voting power of the entity existing following the merger, consolidation or
similar transaction. In all other cases, the other entity to the transaction and
not the Company shall be the Surviving Entity. In making the determination of
ownership by the stockholders of an entity immediately after the merger,
consolidation or similar transaction, equity securities that the stockholders
owned immediately before the merger, consolidation or similar transaction as
stockholders of another party to the transaction shall be disregarded. Further,
outstanding voting securities of an entity shall be calculated by assuming the
conversion of all equity securities convertible (immediately or at some future
time) into shares entitled to vote.
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6.2 Terms and Conditions to Which Only ISOs Are Subject. Options granted
under the Plan designated as ISOs shall be subject to the following terms and
conditions:
6.2.1 Exercise Price. Notwithstanding Section 6.1, the exercise
price of an ISO granted to any person who owns, directly or by attribution under
the Code (currently Section 424(d)), stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any Affiliate
(a "10% Stockholder") shall in no event be less than 110% of the fair market
value (determined in accordance with Section 6.1.9) of the stock covered by the
Option at the time the Option is granted.
6.2.2 Disqualifying Dispositions. If stock acquired by exercise of
an ISO granted pursuant to the Plan is disposed of in a "disqualifying
disposition" within the meaning of Section 422 of the Code (a disposition within
two years from the date of grant of the Option or within one year after the
issuance of such stock on exercise of the Option), the holder of the stock
immediately before the disposition shall promptly notify the Company in writing
of the date and terms of the disposition and shall provide such other
information regarding the Option as the Company may reasonably require.
6.2.3 Grant Date. If an ISO is granted in anticipation of employment
as provided in Section 5.4, the Option shall be deemed granted, without further
approval, on the date the Grantee assumes the employment relationship forming
the basis for such grant, and, in addition, satisfies all requirements of the
Plan for Options granted on that date.
6.2.4 Term. Notwithstanding Section 6.1.11, no ISO granted to any
10% Stockholder shall be exercisable more than five years after the date of
grant.
6.2.5 $100,000 Limitation. To the extent that the aggregate fair
market value (determined at the time of grant) of Common Stock with respect to
which ISOs are exercisable for the first time by a Grantee during any calendar
year (under all plans of the Company and its Affiliates) exceeds $100,000, the
Options or portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as NQOs.
6.3 Manner of Exercise. A Grantee wishing to exercise an Option shall give
written notice to the Company at its principal executive office, to the
attention of the officer of the Company designated by the Administrator,
accompanied by payment of the exercise price and/or withholding taxes as
provided in Sections 6.1.7 and 6.1.8. The date the Company receives written
notice of an exercise hereunder accompanied by the applicable payment will be
considered as the date such Option was exercised. Promptly after receipt of
written notice of exercise and the applicable payments called for by this
Section 6.3, the Company shall, without stock issue or transfer taxes to the
holder or other person entitled to exercise the Option, deliver to the holder or
such other person a certificate or certificates for the requisite number of
shares of Common Stock. A holder or permitted transferee of an Option shall not
have any privileges as a stockholder with respect to any shares of Common Stock
to be issued until the date of issuance (as evidenced by the appropriate entry
on the books of the Company or a duly authorized transfer agent) of such shares.
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6.4 Stock splits, mergers, etc.
6.4.1 If outstanding shares of the Common Stock shall be subdivided
into a greater number of shares, or a dividend in Common Stock shall be paid in
respect of the Common Stock, the exercise price of any outstanding Option in
effect immediately prior to such subdivision or at the record date of such
dividend shall, simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend, be proportionately reduced,
and conversely, if the outstanding shares of the Common Stock shall be combined
into a smaller number of shares, the exercise price of any outstanding options
in effect immediately prior to such combination shall, simultaneously with the
effectiveness of such combination, be proportionately increased.
6.4.2 When any adjustment is required to be made in the exercise
price, the number of shares purchasable upon the exercise of any outstanding
Option shall be adjusted to that number of shares determined by (a) multiplying
an amount equal to the number of shares purchasable upon the exercise of the
Option immediately prior to such adjustment by the exercise price in effect
immediately prior to such adjustment, and then (b) dividing that product by the
exercise price in effect immediately after such adjustment.
6.4.3 In case of any merger, consolidation or capital reorganization
or any reclassification of the Common Stock (other than the matters described in
Section 6.4.1), upon exercise of any Option outstanding at the time of such
merger, consolidation or capital reorganization or reclassification of the
Common Stock, the holder shall receive the kind and number of shares of stock or
other securities or property receivable upon such event by a holder of the
number of shares of the Common Stock that such Option entitles the holder to
purchase from the Company immediately prior to such event. In every such case,
appropriate adjustment shall be made in the application of the provisions set
forth in the Option agreement and in the Plan with respect to the rights and
interests thereafter of the Grantee, to the end that the provisions set forth in
the Option agreements and in the Plan (including the specified changes and other
adjustments to the exercise price) shall thereafter be applicable in relation to
any shares or other property thereafter purchasable upon exercise of such
Option.
6.4.4 Any adjustments required or contemplated by this Section 6.4
shall be made by the Administrator, whose determination in that respect shall be
final, binding and conclusive.
6.4.5 Except as expressly provided in this Section 6.4, no Grantee
shall have any rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, and the dissolution,
liquidation, merger, consolidation or split-up or sale of assets or stock to
another corporation, or any issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of, or Exercise Price for, the shares.
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6.4.6 Neither the Plan, nor the grant or existence of Options under
the Plan, shall affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate, dissolve or liquidate, or to sell
or transfer all or any part of its business or assets.
6.4.7 The Company shall not be required to issue fractional shares
as a result of any adjustments pursuant to this Section 6.4. If an adjustment
under this Section 6.4 would result in a fractional share interest under an
Option or any vesting of any installment, the Administrator's decision as to
inclusion or exclusion of that fractional share interest shall be final, but no
fractional shares of stock shall be issued under the Plan on account of any such
adjustment.
7. EMPLOYMENT OR CONSULTING RELATIONSHIP
Nothing in the Plan, or any Option granted under the Plan, shall interfere
with or limit in any way the right of the Company or of any of its Affiliates to
terminate the employment of any Grantee nor confer upon any Grantee any right to
continue in the employ of, or consult with, or advise, the Company or any of its
Affiliates.
8. CONDITIONS UPON ISSUANCE OF SHARES
8.1 Securities Laws. Notwithstanding the provisions of any Option, the
Company shall have no obligation to issue shares under the Plan unless such
issuance shall be registered or qualified under applicable securities laws,
including, without limitation, the Securities Act of 1933, as amended (the
"Securities Act") or exempt from such registration or qualification. The Company
shall have no obligation to register or qualify such issuance under the
Securities Act or other securities laws.
8.2 Non-Compete Agreement. As a further condition to the receipt of Common
Stock pursuant to the exercise of an Option, the Grantee may be required not to
render services for any organization, or engage directly or indirectly in any
business, competitive with the Company at any time during which an Option is
outstanding to such Grantee and for six months after any exercise of an Option.
Failure to comply with this condition shall cause such Option and the exercise
or issuance of shares thereunder to be rescinded and the benefit of such
exercise, issuance or award to be repaid to the Company.
9. NON-EXCLUSIVITY OF THE PLAN
The adoption of the Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options other than under the Plan.
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10. AMENDMENTS TO PLAN
The Board may at any time amend, alter, suspend or discontinue the Plan.
Without the consent of a Grantee, no amendment, alteration, suspension or
discontinuance may adversely affect such person's outstanding Options except to
conform the Plan and ISOs granted under the Plan to the requirements of federal
or other tax laws relating to ISOs. No amendment, alteration, suspension or
discontinuance shall require stockholder approval unless (a) stockholder
approval is required to preserve incentive stock option treatment for federal
income tax purposes or (b) the Board otherwise concludes that stockholder
approval is advisable.
11. EFFECTIVE DATE OF PLAN; TERMINATION
The Plan became effective on August 29, 2006, the date of adoption by the
Board; provided, however, that no shares of Common Stock shall be issued, and no
Option shall be exercisable, unless and until the Plan is approved by the
shareholders pursuant to Delaware law within 12 months after adoption by the
Board. If any Options are so granted and stockholder approval shall not have
been obtained within 12 months of the date of adoption of the Plan by the Board,
such Options shall terminate retroactively as of the date they were granted. The
Plan (but not Options previously granted under the Plan) shall terminate on June
30, 2016. Termination of the Plan shall not affect any outstanding Options,
which shall continue to be governed by the Plan and the related Option
agreement.
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