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As filed with the Securities and Exchange Commission on March 9, 1999
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
under
The Securities Act of 1933
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MCGRATH RENTCORP
(Exact name of issue as specified in its charter)
California 94-2579843
(State of incorporation) (I.R.S. Employer Identification No.)
5700 Las Positas Road
Livermore, CA 94550
(Address of principal executive offices)
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1998 STOCK OPTION PLAN
(Full title of the plan)
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DELIGHT SAXTON
Senior Vice President, Chief Financial Officer and Secretary
McGRATH RENTCORP
5700 Las Positas Road
Livermore, CA 94550
1-925-606-9200
(Name, address, and telephone number, including area code, of agent for service)
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Copy to
Christopher Ream, Esq.
1717 Embarcadero Road
Palo Alto, CA 94303
1-650-424-0821
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Title of Securities Maximum Amount to Offering Price Aggregate Amount of
to be Registered be Registered (1) Per Share Offering Price Registration Fee
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Common Stock 212,000 shares(2) $20.81 $4,411,720 $1,226.46
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Common Stock 20,000 shares(3) $20.25 $405,000 $112.59
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Common Stock 10,000 shares(4) $21.6875 $216,875 $60.29
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Common Stock 1,758,000 shares(5) $18.00 $31,644,000 $8,979.03
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TOTAL 2,000,000 SHARES $36,677,595 $10,196.37
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(1) For the sole purpose of calculating the Registration Fee, the number of
shares to be registered under this Registration Statement has been
broken down into four subtotals.
(2) Registration Fee computed pursuant to Section 6(b) and Rule 457(h)(1)
covering 212,000 shares for which options have been granted under the
1998 Stock Option Plan (the "Plan") at an exercise price of $20.81 per
share.
(3) Registration Fee computed pursuant to Section 6(b) and Rule 457(h)(1)
covering 20,000 shares for which options have been granted under the
Plan at an exercise price of $20.25 per share.
(4) Registration Fee computed pursuant to Section 6(b) and Rule 457(h)(1)
covering 10,000 shares for which an option has been granted under the
Plan at an exercise price of $21.6875 per share.
(5) Estimated solely for the purpose of computing the Registration Fee
pursuant to Section 6(b), Rule 457(c) and Rule 457(h)(1) covering
1,758,000 shares authorized under the Plan but for which options have
not yet been granted, on the basis of the average of the high and low
prices of the Registrant's Common Stock as reported on the NASDAQ
National Market System on March 3, 1999.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference:
The description of the Registrant's Common Stock contained in
Amendment No. 1 to the Registrant's Registration Statement on
Form S-2 filed May 1, 1991, Registration No. 33-39633.
The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997.
The Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998.
The Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998.
The Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after the date of
this Registration Statement and prior to the filing of a post-effective
amendment to this Registration Statement which indicates that all securities
offered have been sold or which deregisters all securities then remaining unsold
shall be deemed to be incorporated by reference in this Registration Statement
and be a part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the Common Stock to be issued upon the exercise of
options under the Plan will be passed upon by Christopher Ream, Esq. of Palo
Alto, California. Mr. Ream has been Assistant Secretary of the Registrant since
its inception in 1979, and is the beneficial owner of 248,500 shares of the
Registrant's Common Stock (including 6,000 shares held in trust for his children
as to which he disclaims any beneficial ownership). Mr. Ream is also the
managing general partner of a partnership which, in 1979 and 1981, invested an
aggregate of $235,000 in relocatable
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modular offices to be managed by the Registrant in its rental fleet, of which
$77,780 was for Mr. Ream's own account. This partnership's interest in the
relocatable modular offices was purchased by the Registrant in 1997, and the
partnership no longer has an interest in any relocatable modular offices managed
by the Registrant.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended. The Registrant's
Bylaws provide for indemnification of its directors, officers, employees and
other agents to the maximum extent permitted by the California General
Corporation Law.
The Registrant has entered into Indemnification Agreements with each of
its directors and executive officers. These Agreements require the Registrant to
indemnify its officers and directors against expenses and, in certain cases,
judgment, settlement or other payments incurred by the officer or director in
suits brought by the Registrant, derivative actions brought by shareholders and
suits brought by other third parties. These Agreements provide for
indemnification to the fullest extent permitted by California law in situations
where the officer or director is made, or threatened to be made, party to the
legal proceeding because of his service to the Registrant.
ITEM 7. EXCEPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit
Number Description
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4.1 1998 Stock Option Plan
4.2 Exemplar of the form of Employee Incentive Stock Option Agreement
issued under the 1998 Stock Option Plan
4.3 Exemplar of the form of Director's Non-Qualified Stock Option
Agreement issued under the 1998 Stock Option Plan
5.1 Opinion of Christopher Ream, Esq. as to the legality of the
Common Stock being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Counsel (contained in Exhibit 5.1)
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ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to file, during any period
in which offers or sales are being made, a post-effective amendment to this
Registration Statement to include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to remove from
registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15 (d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Livermore, State of California, on March 2, 1999.
MCGRATH RENTCORP
By /s/ Dennis C. Kakures
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Dennis C. Kakures, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Capacity Date
/s/ Robert P. McGrath Chairman of the Board of March 2, 1999
- ------------------------------ Directors and Chief
ROBERT P. McGRATH Executive Officer
/s/ Dennis C. Kakures President and Chief Operat- March 2, 1999
- ------------------------------ ing Officer
DENNIS C. KAKURES
/s/ Delight Saxton Senior Vice President, Chief
- ------------------------------ Financial Officer and March 2, 1999
DELIGHT SAXTON Secretary (Principal
Financial Officer)
/s/ Thomas J. Sauer Vice President and Treasurer
- ------------------------------ (Principal Accounting March 2, 1999
THOMAS J. SAUER Officer)
/s/ Bryant J. Brooks Director March 4, 1999
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BRYANT J. BROOKS
/s/ William J. Dawson Director March 3, 1999
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WILLIAM J. DAWSON
/s/ Joan M. McGrath Director March 3, 1999
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JOAN M. McGRATH
/s/ Ronald H. Zech Director March 4, 1999
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RONALD H. ZECH
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INDEX TO EXHIBITS
Exhibit
Number Description
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4.1 1998 Incentive Stock Option Plan
4.2 Exemplar of the form of Employee Incentive Stock Option Agreement
issued under the 1998 Stock Option Plan
4.3 Exemplar of the form of Director's Non-Qualified Stock Option
Agreement issued under the 1998 Stock Option Plan
5.1 Opinion of Christopher Ream, Esq. as to the legality of the
Common Stock being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Counsel (contained in Exhibit 5.1)
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MCGRATH RENTCORP
Registration Statement on Form S-8
EXHIBIT 4.1
2
MCGRATH RENTCORP
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1998 STOCK OPTION PLAN
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MCGRATH RENTCORP
1998 STOCK OPTION PLAN
SECTION 1. PURPOSE OF PLAN; ADMINISTRATION.
1.1 PURPOSE. The intent and purpose of this 1998 Stock Option Plan (the
"PLAN") is to strengthen McGrath RentCorp, a California corporation
("MCGRATH"), by providing a means to attract and retain competent personnel and
to provide to participating officers, key employees, directors and others added
incentive for high levels of performance and for unusual efforts to improve the
financial performance of MCGRATH. The purposes may be achieved through the grant
of options to purchase common stock of MCGRATH (the "COMMON STOCK"). The options
granted under the PLAN may be incentive stock options ("INCENTIVE OPTIONS") as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"CODE"), or options which are not incentive stock options as so defined in that
code section ("NON-QUALIFIED OPTIONS").
1.2 ADMINISTRATION. This PLAN shall be administered by the Board of
Directors of MCGRATH (the "BOARD"). Any action of the BOARD with respect to the
administration of the PLAN shall be taken pursuant to a majority vote, or by the
written consent of all of its members. Subject to the express provisions of the
PLAN, the BOARD shall have the authority to construe and interpret the PLAN, to
define the terms used herein, to prescribe, amend and rescind rules and
regulations relating to the administration of the PLAN, and to make all other
determinations necessary or advisable for the administration of the PLAN. The
determinations of the BOARD on the foregoing matters shall be conclusive.
Subject to the express provisions of the PLAN, the BOARD shall determine from
the eligible class the individuals who shall receive options, and the terms and
provisions of such options (which need not be identical). No member of the BOARD
shall be liable for any action, failure to act, determination or interpretation
made in good faith with respect to the PLAN or any transaction hereunder.
1.3 PARTICIPATION. Only officers, key employees and directors of
MCGRATH or of any subsidiary of MCGRATH, and other persons who provide
significant valuable services to MCGRATH or any subsidiary of MCGRATH, shall be
eligible for selection to participate in the PLAN upon approval by the BOARD.
INCENTIVE OPTIONS may be granted only to persons who are employees of MCGRATH or
a subsidiary of MCGRATH. An individual who has been
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granted an option (a "PARTICIPANT") may, if otherwise eligible, be granted
additional options if the BOARD shall so determine.
1.4 STOCK SUBJECT TO THE PLAN. Subject to the adjustments provided in
Section 3.1 hereof, the stock to be offered under the PLAN shall be shares of
authorized but unissued COMMON STOCK. The aggregate amount of COMMON STOCK to be
issued under this PLAN shall not exceed two million (2,000,000) shares, subject
to adjustment as set forth in Section 3.1 of this PLAN. If any option granted
hereunder shall expire or terminate for any reason without having been fully
exercised, the unpurchased shares subject thereof shall again be available for
the purposes of this PLAN.
1.5 OPTION AGREEMENT. All options granted hereunder shall be evidenced
by a written stock option agreement, which agreement shall specify whether the
option granted is intended to be an INCENTIVE OPTION or to be a NON-QUALIFIED
OPTION. The BOARD may provide for additional terms and conditions in such stock
option agreements not inconsistent with the terms and conditions of this Plan,
and in the case of INCENTIVE OPTIONS, terms and provisions not prohibited by
Section 422 of the CODE.
SECTION 2. STOCK OPTION TERMS.
2.1 OPTION PRICE. The purchase price of the COMMON STOCK covered by
each option shall be determined by the BOARD, but shall not be less than 100% of
the FAIR MARKET VALUE of such stock on the date immediately preceding the
granting of the option.
2.1.1 If an INCENTIVE OPTION is granted to an employee who, at
the time such option is granted, owns or is deemed to own more than ten percent
(10%) of the total combined voting power of all classes of stock of MCGRATH, the
option price shall be at least 110% of the FAIR MARKET VALUE of the COMMON STOCK
on the date immediately preceding the granting of the option.
2.1.2 "FAIR MARKET VALUE" shall mean: (1) the closing price of
the COMMON STOCK as reported by the NASDAQ Stock Market or by any national
exchange on which the COMMON STOCK may hereafter be listed, or if no trading
occurred on such date for the next preceding date on which such trading
occurred; or (2) if there is no trading of the COMMON STOCK either on the NASDAQ
Stock Market or on a national exchange, the value established by the BOARD in
good faith.
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2.1.3 The purchase price of any shares purchased shall be paid
in full in cash or by check acceptable to MCGRATH at the time of each purchase;
provided that, subject to the discretion of the BOARD and upon receipt of all
regulatory approvals, the person exercising the option may deliver shares of
COMMON STOCK in payment of the exercise price. Such stock shall be valued at its
FAIR MARKET VALUE on the date immediately preceding the day of exercise of the
option.
2.2 OPTION PERIOD. Except as provided below, each option and all rights
or obligations thereunder shall expire on such date as the BOARD shall
determine, but not later than the day before the tenth (10th) anniversary of the
date on which the option is granted (the "EXPIRATION DATE"), and shall be
subject to earlier termination as hereinafter provided.
2.2.1 If an INCENTIVE OPTION is granted to an employee, who at
the time the option is granted owns or is deemed to own more than ten percent
(10%) of the total combined voting power of all classes of stock of MCGRATH,
each such option and all rights or obligations thereunder shall expire as the
BOARD shall determine but not later than the day before the fifth (5th)
anniversary of the date on which the option is granted (the "EXPIRATION DATE").
2.3 EXERCISE OF OPTIONS. Each option shall become exercisable and the
total number of shares subject thereto shall be purchasable, in such
installments, which need not be equal, as the BOARD shall determine (subject to
Section 2.10 of this PLAN in the case of an INCENTIVE OPTION); provided,
however, that if the PARTICIPANT shall not purchase in any given installment
period all of the shares purchasable, the right to purchase any shares not
purchased in such installment period shall continue until the EXPIRATION DATE or
sooner termination of such PARTICIPANT's option. The BOARD may, at any time
after grant of the option and from time to time, increase the number of shares
purchasable in any installment, subject to the restrictions imposed by Section
422 of the CODE in the case of INCENTIVE OPTIONS, but may not increase the total
number of shares subject to the option. No option or installment thereof shall
be exercisable except in respect of whole shares, and fractional share interests
shall be disregarded.
2.4 NON-TRANSFERABILITY OF OPTIONS. An option granted under this PLAN
shall, by its terms, be non-transferable by the PARTICIPANT other than by will
or the laws of descent and distribution, and shall be exercisable during the
PARTICIPANT's lifetime only by the PARTICIPANT or his or her duly appointed
guardian or personal representative.
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2.5 TERMINATION OF EMPLOYMENT. If the PARTICIPANT's employment with
MCGRATH terminates for any reason other than death or disability, such
PARTICIPANT shall have, at the discretion of the BOARD at the time of grant of
the option, a period no longer than three (3) months after the date of
termination to exercise his or her option. Upon expiration of such period, all
unexercised options of such PARTICIPANT under this PLAN shall terminate. If the
BOARD does not grant such a period in the written stock agreement, all of the
PARTICIPANT's unexercised options shall terminate at the close of business
thirty (30) days after PARTICIPANT's last day of employment.
2.5.1 Employment Not Continued. Neither service as a director,
consultant, advisor or other service provider by a PARTICIPANT who had been
granted an option when an employee, nor the payment of a director's,
consultant's, advisor's or other fee by MCGRATH, shall be sufficient to
constitute continued "employment" by MCGRATH with respect to such option.
2.5.2 Transfer. An employee's employment shall not be deemed
to have terminated by reason of a transfer between MCGRATH, its parent, any
subsidiary, or any successor.
2.5.3 Leave of Absence. An employee's employment shall not be
deemed to have terminated by reason of a leave of absence approved by MCGRATH.
For purposes of INCENTIVE OPTIONS, no such leave of absence may exceed four (4)
months unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence
approved by MCGRATH is not so guaranteed, after the first four (4) months of
such leave any INCENTIVE OPTION held by the PARTICIPANT shall cease to be
treated as an INCENTIVE OPTION and shall be treated for tax purposes as a
NON-QUALIFIED OPTION. In the event of a leave of absence approved by MCGRATH,
the vesting of all options held by such employee shall be tolled during such
absence, unless otherwise provided by MCGRATH.
2.5.4 Directors. With respect to a PARTICIPANT who was a
director, but not an employee, of MCGRATH or one of its subsidiaries when
granted an option, he or she shall be deemed to have terminated employment for
purposes of such option on the date he or she ceases to be a director of MCGRATH
or one of its subsidiaries.
2.5.5 Consultants, Advisors and Others. With respect to a
PARTICIPANT who was neither an employee nor a director of MCGRATH or one of its
subsidiaries when granted an option, he or she shall be deemed to have
terminated employment for purposes of such
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option on the date of the expiration of his or her written contract under which
he or she provided services to MCGRATH; or if there is no such written contract,
then he or she shall be deemed to have terminated employment for purposes of
such option on the date three (3) months after MCGRATH last received services
from the PARTICIPANT.
2.6 DISABILITY OF PARTICIPANT. If a PARTICIPANT's employment with
MCGRATH terminates as a result of his or her disability, such PARTICIPANT shall
have the lesser of twelve (12) months after the date of termination or the
EXPIRATION DATE to exercise his or her option. Upon expiration of such
twelve-month period or until the EXPIRATION DATE, if earlier, all unexercised
options of such PARTICIPANT under this PLAN shall terminate. For purposes of
this PLAN, an individual is disabled if he or she is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or that has lasted, or
can be expected to last, for a continuous period of not less than twelve (12)
months.
2.7 DEATH OF PARTICIPANT. If any PARTICIPANT dies while employed by, or
otherwise providing services to, MCGRATH, such PARTICIPANT's options may be
exercised by the person or persons to whom the PARTICIPANT's rights under the
options shall pass by will or by the applicable laws of descent and
distribution. Such person or persons shall have the lesser of twelve (12) months
after the date of the PARTICIPANT's death or until the EXPIRATION DATE of the
options to exercise the options. Upon expiration of such twelve-month period or
until the EXPIRATION DATE, if earlier, all unexercised options of such
PARTICIPANT under this PLAN shall terminate.
2.8 MODIFICATION IN LEVEL OF EMPLOYMENT.
2.8.1 Reduction in Hours. An employee's employment shall not
be deemed to have terminated by reason of a reduction in hours scheduled to be
worked if approved by an officer of MCGRATH. In the event of a reduction in
hours scheduled to be worked, the rate of vesting thereafter of all options held
by such employee shall be reduced proportionately to the reduction in hours,
unless otherwise provided by MCGRATH. The reduction in the rate of vesting may
result in the EXPIRATION DATE being reached prior to the full vesting of all
shares subject to the options, in which case unvested shares shall be forfeited
and returned to the PLAN.
2.8.2 Reduction in Duties and Responsibilities. A
PARTICIPANT's employment shall not be deemed to have terminated by reason of a
reduction in the duties or responsibilities of the PARTICIPANT with respect to
MCGRATH. In the event of a
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substantial reduction in the duties and responsibilities expected of a
PARTICIPANT, MCGRATH and the PARTICIPANT may mutually agree in writing to a
reduction in the number of shares subject to any options held by such
PARTICIPANT and/or a reduction in the rate of vesting of such options.
2.9 ISSUANCE OF STOCK CERTIFICATES. Upon exercise of an option, the
person exercising such option shall be entitled to one stock certificate
evidencing the shares acquired upon exercise; provided, however, that any person
who tenders COMMON STOCK when exercising the option shall be entitled to receive
two certificates, one representing a number of shares equal to the number of
shares exchanged for the stock acquired upon exercise, and another representing
the additional shares, if any, acquired upon exercise of the option; provided,
further, that if the vesting limitation set forth in Section 2.10 below is
exceeded, the person exercising the option shall be entitled to receive two
certificates, one representing a number of shares constituting INCENTIVE OPTION
shares, and another representing the excess shares issued as NON-QUALIFIED
OPTION shares.
2.10 LIMITATION ON VESTING OF INCENTIVE OPTIONS. The aggregate FAIR
MARKET VALUE (determined as of the time the option is granted) of the stock,
which first becomes exercisable by the PARTICIPANT during any calendar year
under all INCENTIVE OPTIONS of MCGRATH or any subsidiary or parent of MCGRATH,
shall not exceed $100,000, as determined in accordance with the rules and
regulations of the Internal Revenue Service promulgated under the CODE. The
$100,000 limitation described in this Section 2.10 shall be applied to all such
INCENTIVE OPTIONS in the order granted to the PARTICIPANT. In the event such
limitation is exceeded, the excess shares shall be deemed shares subject to a
NONQUALIFIED OPTION and shall not be treated as part of an INCENTIVE OPTION
within the meaning of Section 422 of the CODE.
SECTION 3. OTHER PROVISIONS.
3.1 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
3.1.1 Subject to any action by the stockholders required by
law, the number of shares of COMMON STOCK covered by this PLAN and any
outstanding 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 resulting from a subdivision or consolidation of shares or the payment of
a stock dividend (but only on the COMMON STOCK) or any other increase or
decrease in the number of such shares effected without receipt of consideration
by
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MCGRATH (for this purpose, issuances of shares upon conversion of convertible
securities shall be deemed an issuance for which MCGRATH receives
consideration).
3.1.2 The successor corporation in any merger or consolidation
of MCGRATH shall be required to assume options then outstanding under the PLAN.
Should MCGRATH sell all or substantially all of its assets in a transaction
wherein the employees of MCGRATH continue to be employed by the purchasing
corporation, such purchasing corporation shall likewise be required to assume
options then outstanding under the PLAN.
3.1.3 Adjustments under this Section 3.1 shall be made by the
BOARD, whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. No fractional shares of COMMON
STOCK shall be issued under the PLAN on account of any such adjustment.
3.2 DISSOLUTION OR LIQUIDATION. A dissolution or liquidation of MCGRATH
shall cause an outstanding option to terminate; provided that the holder of any
outstanding option 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 his or her option to the extent then exercisable; provided further that
the BOARD in its discretion (to the extent permitted by the CODE) may in the
event of any such dissolution or liquidation accelerate the accrual of exercise
rights in such manner as the BOARD shall deem appropriate.
3.3 RIGHTS OF PARTICIPANTS AND BENEFICIARIES.
3.3.1 Nothing contained in the PLAN (or in any option granted
pursuant to the PLAN) shall confer upon any employee, director or other service
provider any right to continue in the employ of MCGRATH (or its subsidiaries),
or constitute any contract or agreement of employment, or interfere in any way
with the right of MCGRATH (or its subsidiaries) to reduce such person's
compensation from the rate in existence at the time of the granting of an option
or to terminate such person's employment; but nothing contained herein or in any
option agreement shall affect any contractual rights of an employee, director or
other service provider.
3.3.2 Except as provided in Section 2.7 of this PLAN, MCGRATH
shall provide all benefits hereunder only to the PARTICIPANT or beneficiaries
entitled thereto pursuant to this PLAN. MCGRATH shall not be liable for the
debts, contracts, or engagements of any PARTICIPANT or his or her beneficiaries,
and rights under this PLAN may not be taken
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in execution or by attachment or garnishment, or by any other legal or equitable
proceeding while in the hands of MCGRATH; nor shall any PARTICIPANT or his or
her beneficiaries have any right to assign, pledge or hypothecate any benefits
hereunder.
3.4 GOVERNMENT REGULATIONS. The PLAN and the grant and exercise of
options shall be subject to all applicable rules and regulations of governmental
authorities.
3.5 WITHHOLDING. MCGRATH or any of its subsidiaries which employ the
PARTICIPANT shall have the right to deduct any sums that federal, state or local
tax law requires to be withheld with respect to the exercise of any option, or
as otherwise may be required by such laws. MCGRATH or such subsidiary may
require as a condition to issuing shares upon exercise of the option that the
PARTICIPANT or other person exercising the option pay any sums that federal,
state or local tax law requires to be withheld with respect to such exercise.
There is no obligation hereunder that any PARTICIPANT be advised of the
existence of the tax or the amount which the employer corporation will be so
required to withhold.
3.5.1 In its sole discretion, MCGRATH may allow a Participant
to satisfy withholding tax obligations by electing to have MCGRATH withhold from
the COMMON STOCK to be issued upon exercise of an option that number of shares
of COMMON STOCK having a FAIR MARKET VALUE equal to the amount required to be
withheld. The FAIR MARKET VALUE of the shares to be withheld shall be determined
as of the day immediately preceding the date the amount of tax to be withheld is
to be determined.
3.6 AMENDMENT AND TERMINATION.
3.6.1 The BOARD may at any time suspend, amend or terminate
this PLAN and may, with the consent of the holder of an option, make such
modifications of the terms and conditions of such PARTICIPANT's option as it
shall deem advisable. No option may be granted during any suspension of the PLAN
or after such termination. The amendment, suspension or termination of the PLAN
shall not, without the consent of the affected PARTICIPANT alter or impair any
rights or obligations under any option theretofore granted under the PLAN.
3.6.2 In addition to BOARD approval of an amendment, if the
amendment would (i) increase the benefits accruing to Participants, (ii)
increase the number of securities issuable under this PLAN or (iii) modify the
requirements for eligibility, or if Section 422 of the CODE requires shareholder
approval of any amendment to the PLAN, then such
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11
amendment shall be approved by the holders of a majority of MCGRATH's
outstanding capital stock entitled to vote at a meeting held for the purpose of
approving such amendment.
3.7 TIME OF GRANT AND EXERCISE.
3.7.1 The granting of an option pursuant to the PLAN shall
take place at the time of the BOARD's action; provided, however, that if the
appropriate resolutions of the BOARD indicate that an option is to be granted as
of and at some future date, the date of grant shall be such future date. In the
event action by the BOARD is taken by the unanimous written consent of its
members, the action by the BOARD shall be deemed to be effective at the time the
last member signs the consent.
3.7.2 An option shall be deemed to be exercised when the
Secretary or Chief Financial Officer of MCGRATH receives written notice from a
PARTICIPANT of such exercise, together with payment of the purchase price.
3.8 NO PRIVILEGES OF STOCK OWNERSHIP. A PARTICIPANT shall not be
entitled to the privileges of stock ownership as to any shares of stock not
actually issued and delivered to him or her.
3.9 NON-DISTRIBUTIVE INTENT. Upon exercise of an option at a time when
there is not in effect under the Securities Act of 1933 a registration statement
relating to the stock issuable under the option, the PARTICIPANT shall represent
and warrant in writing to MCGRATH that the shares purchased are not being
acquired with a view to the distribution thereof. No shares shall be issued upon
the exercise of any option unless and until any then applicable requirements of
the Securities and Exchange Commission, the California Department of
Corporations, and any other regulatory agencies having jurisdiction and of any
exchanges or associations upon which the COMMON STOCK may be listed shall have
been fully satisfied.
3.10 EFFECTIVE DATE OF THE PLAN. This PLAN shall be effective as of
March 9, 1998, and shall within twelve (12) months of such date, and before any
option issued pursuant to the PLAN may be exercised, be submitted to the
shareholders of MCGRATH for the approval by a vote of holders of a majority of
MCGRATH's outstanding capital stock entitled to vote thereon
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3.11 TERMINATION. Unless previously terminated by the BOARD, this PLAN
shall terminate at the close of business on March 8, 2008, and no option shall
be granted under it thereafter, but such termination shall not affect any option
theretofore granted.
End of Plan March 9, 1998
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1
MCGRATH RENTCORP
Registration Statement on Form S-8
EXHIBIT 4.2
2
MCGRATH RENTCORP
1998 STOCK OPTION PLAN
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
This Option Agreement is being entered into as of ___________, 1998, by
and between McGrath RentCorp, a California corporation (hereinafter "MCGRATH")
and JOHN DOE (hereinafter "XXXX"). In accordance with that certain McGrath
RentCorp 1998 Stock Option Plan (the "PLAN"), the Board of Directors of MCGRATH
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. MCGRATH 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 MCGRATH's 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 MCGRATH 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 MCGRATH, 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 MCGRATH. 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, MCGRATH 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 MCGRATH 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 MCGRATH 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
MCGRATH, 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
MCGRATH 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 MCGRATH 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
MCGRATH 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 MCGRATH, shall be sufficient to
constitute continued "employment" of XXXX by MCGRATH with respect to this
OPTION.
5.1.2 XXXX's employment shall not be deemed to have
terminated by reason of a transfer between MCGRATH, 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 MCGRATH. If re-employment
upon expiration of the leave of absence approved by MCGRATH 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 MCGRATH shall not be deemed
to have terminated by reason of a reduction in hours scheduled to be worked if
approved by an officer of MCGRATH.
5.1.5 XXXX's employment with MCGRATH shall not be deemed
to have terminated by reason of a reduction in XXXX's duties or responsibilities
with respect to MCGRATH.
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5.2 Disability. Subject to Section 5.3 below, if XXXX's
employment by MCGRATH 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 MCGRATH, 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
MCGRATH, 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
MCGRATH 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
MCGRATH 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 MCGRATH. (For this
purpose, issuances of shares upon conversion of convertible securities shall be
deemed an issuance for which MCGRATH receives consideration.)
6.2 Acquisition. In the event of any acquisition of MCGRATH
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 MCGRATH shall be defined to be (i) any merger or
consolidation of MCGRATH in which the shareholders of MCGRATH 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 MCGRATH
sells all or substantially all of its assets and the employees of MCGRATH
continue to be employed by the purchasing entity.
6.3 Change in Control. In the event XXXX's employment with
MCGRATH 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 MCGRATH or (ii) a
corporation owned directly or indirectly by the stockholders of MCGRATH
in substantially the same proportions as their ownership of stock of
MCGRATH or (iii) a group which includes Robert P. McGrath or his heirs,
becomes the beneficial owner, directly or indirectly, of securities of
MCGRATH representing 30% or more of the total voting power represented
by MCGRATH's 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
MCGRATH's 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 MCGRATH is a party to a merger or consolidation
with another corporation, other than a merger or consolidation which
results in the voting securities of MCGRATH 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 McGrath 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 MCGRATH in substantially the same proportions as
their ownership of stock of MCGRATH.
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
MCGRATH 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 MCGRATH 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 MCGRATH's business affairs and
financial condition and has had access to such information about
MCGRATH 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 MCGRATH 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
MCGRATH 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. MCGRATH 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 MCGRATH or its
subsidiaries, nor shall it interfere in any way with XXXX's right or MCGRATH's
(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 MCGRATH and, to the extent herein provided, shall be binding upon
and inure to the benefit of XXXX's successors.
MCGRATH RENTCORP
By
-------------------------------
Dennis C. Kakures, President
---------------------------------
JOHN DOE
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EXHIBIT A
To: McGRATH RENTCORP
5700 Las Positas Road
Livermore, CA 94550
Attn: Chief Financial Officer
Subject: Notice of Intention to Exercise Stock Option
With respect to the stock option granted to John Doe on ____________,
1998 to purchase an aggregate of ____________Thousand (_______) shares of
MCGRATH's 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: _______________
1
MCGRATH RENTCORP
Registration Statement on Form S-8
EXHIBIT 4.3
2
MCGRATH RENTCORP
1998 STOCK OPTION PLAN
DIRECTOR'S NON-QUALIFIED STOCK OPTION AGREEMENT
This Option Agreement is being entered into as of ___________, 1998, by
and between McGrath RentCorp, a California corporation (hereinafter "MCGRATH")
and JOHN DOE (hereinafter "DOE"). In accordance with that certain McGrath
RentCorp 1998 Stock Option Plan (the "PLAN"), the Board of Directors of MCGRATH
granted an option on __________, 1998 to DOE to purchase shares of its Common
Stock, as evidenced by this Agreement, subject to the following terms:
1. NUMBER OF SHARES AND PRICE. MCGRATH hereby evidences its grant to
DOE 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 MCGRATH's 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 MCGRATH and
DOE 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. DOE acknowledges
receipt of the copy of the PLAN. The rights of DOE 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 not intended to
be an "incentive stock option" as that term is defined under Section 422 of the
Internal Revenue Code. DOE 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___________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
OPTION SHARES entitled to be purchased, but not purchased in any period, may be
purchased at any subsequent time within the OPTION PERIOD. The vesting of this
OPTION (i.e., the rate at which the installments become exercisable) may be
accelerated under certain circumstances as described in Section 6.2 below.
4.3 How to Exercise. The exercise of this OPTION shall be
effective only upon the delivery to MCGRATH 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 MCGRATH 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.
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
MCGRATH, 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
MCGRATH already owned by DOE 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 Directorship. Subject to Sections 5.2 and
5.3 below, if DOE ceases to be a director of MCGRATH for any reason, DOE may
exercise this OPTION only to the extent DOE was entitled to exercise it on the
date he ceased to be a director (subject to Section 6.2 below). If DOE 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 a director of MCGRATH 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.
5.2 Disability. Subject to Section 5.3 below, if DOE ceases to
be a director of MCGRATH as a result of DOE's disability, DOE may exercise this
OPTION if and only to the extent
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DOE was entitled to exercise it at the date he ceased to be a director, but only
during the OPTION PERIOD and within twelve (12) months after the date DOE ceases
to be a director of MCGRATH. 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 or she 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 DOE's death while a director of
MCGRATH 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 DOE'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 DOE'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
MCGRATH shall cause this OPTION to terminate; provided that DOE 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; provided further that the Board of Directors may, in its
discretion, in the event of any such dissolution or liquidation, accelerate the
accrual of exercise rights in such manner as the Board of Directors shall deem
appropriate.
6. RECAPITALIZATION; 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
MCGRATH resulting from a subdivision or consolidation of shares or the payment
of a stock dividend (but only on the Common Stock) or any other increase in the
number of such shares effected without receipt of consideration by MCGRATH. (For
this purpose, issuances of shares upon conversion of convertible securities
shall be deemed an issuance for which MCGRATH receives consideration.)
6.2 Change in Control. In the event of a "Change in Control,"
the accrual of exercise rights hereunder shall accelerate upon such "Change in
Control" such that this OPTION shall
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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:
6.2.1 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 MCGRATH or (ii) a
corporation owned directly or indirectly by the stockholders of MCGRATH
in substantially the same proportions as their ownership of stock of
MCGRATH or (iii) a group which includes Robert P. McGrath or his heirs,
becomes the beneficial owner, directly or indirectly, of securities of
MCGRATH representing 30% or more of the total voting power represented
by MCGRATH's then outstanding voting securities; or
6.2.2 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
MCGRATH's 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
election was previously so approved, cease for any reason to constitute
a majority thereof; or
6.2.3 MCGRATH is a party to a merger or consolidation
with another corporation, other than a merger or consolidation which
results in the voting securities of MCGRATH 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
6.2.4 McGrath 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 MCGRATH in substantially the same proportions as
their ownership of stock of MCGRATH.
7. INVESTMENT INTENT.
7.1 Doe's Representations. As a condition to accepting this
OPTION, and as a condition to its exercise, DOE makes the following
representations and agreements, and represents,
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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:
7.1.1 DOE has, by reason of DOE's business or
financial experience, the capacity to evaluate the merits and risks of
an investment in MCGRATH and to protect his interest in connection with
the issuance of this OPTION and the purchase of any OPTION SHARES.
7.1.2 DOE is aware of MCGRATH's business affairs and
financial condition and has had access to such information about
MCGRATH as DOE has deemed necessary or desirable to reach an informed
and knowledgeable decision to acquire this OPTION and the OPTION
SHARES. DOE will purchase the OPTION SHARES for investment for his own
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 ("SECURITIES ACT").
7.1.3 DOE 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, DOE understands that, in the view of the
Securities and Exchange Commission ("COMMISSION"), the statutory basis
for such exemption may not be present if DOE'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.
7.1.4 DOE 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. DOE further acknowledges and understands
that MCGRATH is under no obligation to register the OPTION SHARES.
7.1.5 DOE 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.
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7.1.6 DOE further acknowledges and understands that
MCGRATH 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, DOE would be precluded from selling the OPTION
SHARES under Rule 144 even if the one or two-year minimum holding
periods had been satisfied.
7.1.7 DOE 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 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.
7.2 Legends. MCGRATH may place on the certificates evincing
the OPTION SHARES appropriate legends referring to the restrictions on transfer
set forth in Section 7.1 above and as may be required by the California
Commissioner of Corporations. DOE 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. RIGHTS NOT CONFERRED. This OPTION shall not confer upon DOE any
right with respect to continuation of his position as a director of MCGRATH.
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 DOE's lifetime only by DOE or DOE's duly
appointed guardian or personal representative. Subject to the foregoing,
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this Agreement shall be binding upon and shall inure to the benefit of any
successors or assigns of MCGRATH and, to the extent herein provided, shall be
binding upon and inure to the benefit of DOE's successors.
MCGRATH RENTCORP
By
------------------------------------------
Robert P. McGrath, Chief Executive Officer
---------------------------------------------
JOHN DOE
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EXHIBIT A
To: McGRATH RENTCORP
5700 Las Positas Road
Livermore, CA 94550
Attn: Chief Financial Officer
Subject: Notice of Intention to Exercise Stock Option
With respect to the stock option granted to John Doe on ____________,
1998 to purchase an aggregate of ___________Thousand (_______) shares of
MCGRATH's Common Stock as evinced by the Director's Non-Qualified 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: _______________________
In connection with such exercise, the undersigned hereby reaffirms that
the representations and agreements set forth in Section 7.1 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: _______________________
1
EXHIBIT 5.1
[CHRISTOPHER REAM LETTERHEAD]
March 8, 1999
McGrath RentCorp
2700 Las Positas Road
Livermore, CA 94550
Gentlemen:
I have acted as counsel for McGrath RentCorp (the "Company") in
connection with the adoption of its 1988 Stock Option Plan (the "Plan") and in
connection with the registration under the Securities Act of 1933, as amended,
of 2,000,000 shares of the Company's Common Stock (the "Shares") to be issued
upon the exercise of options granted under the Plan. I have examined the
Registration Statement on Form S-8 to be filed by the Company with the
Securities and Exchange Commission on March 9, 1999. As the Company's legal
counsel, I have examined the proceedings taken, and am familiar with the
proceedings proposed to be taken by the Company, in connection with the sale and
issuance of the Shares.
It is my opinion, upon completion of the proceedings being taken prior
to the issuance of the Shares, including proceedings being taken in order to
permit such transactions to be carried out in accordance with applicable state
securities laws, that the Shares will be legally and validly issued, fully paid
and non-assessable when issued and sold in the manner described in the
Registration Statement and in accordance with the resolutions adopted by the
Board of Directors of the Company.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and further consent to the use of my name wherever
appearing in the Registration Statement.
Very truly yours,
Christopher Ream
Christopher Ream
CR:lc
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-8 of our report dated
February 20, 1998, incorporated by reference in McGrath RentCorp's Form 10-K for
the year ended December 31, 1997, and to all references to our Firm included in
this Registration Statement.
Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Francisco, California
March 5, 1999
