UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
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appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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General
Finance Corporation
(Name of Registrant as
Specified In Its Charter)
(Name of Person(s) Filing
Proxy Statement, if other than the Registrant)
Payment
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
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Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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GENERAL
FINANCE CORPORATION
39
East Union Street
Pasadena,
CA 91103
October 19,
2009
Dear
Stockholders:
We
cordially invite you to attend the 2009 Annual Meeting of Stockholders. The
meeting will be held on Thursday, December 10, 2009 at 10:00 a.m.
Pacific Standard Time at the offices of General Finance Corporation located at
39 East Union Street, Pasadena, California.
The
accompanying Notice of the 2009 Annual Meeting of Stockholders and Proxy
Statement, which includes our Form 10-K for the fiscal year ended June 30,
2009 as filed with the Securities and Exchange Commission, describe the items to
be considered and acted upon by stockholders.
At the
meeting you will be asked to elect two Class C Directors, approve the
General Finance Corporation 2009 Stock Incentive Plan and ratify the selection
of Crowe Horwath LLP as our independent auditors for the fiscal year ending
June 30, 2010.
Whether
or not you plan to attend the meeting, it is important that your shares be
represented and voted at the meeting. Therefore, we urge you to complete, sign,
date and return the enclosed proxy card, even if you plan to attend the
meeting.
We look
forward to seeing you at the meeting.
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Sincerely,
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Ronald
F. Valenta
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Chief
Executive Officer and President
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GENERAL
FINANCE CORPORATION
39
East Union Street
Pasadena,
CA 91103
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
AND
NOTICE
OF INTERNET AVAILABILITY OF PROXY MATERIALS
To
be held on December 10, 2009
TO OUR
STOCKHOLDERS:
Notice is
hereby given to the holders of common stock of General Finance Corporation that
the Annual Meeting of Stockholders ("Annual Meeting") will be held on Thursday,
December 10, 2009 at 10:00 a.m. Pacific Standard Time at the offices
of General Finance Corporation located at 39 East Union Street, Pasadena,
California.
At the
Annual Meeting we will ask you to:
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1.
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Election of
Directors. Elect two Class C directors to serve for
a term of three years and until their successors are elected and
qualified. Ronald L. Havner, Jr. and Ronald F. Valenta, the persons
nominated by the Board of Directors as the two Class C Directors, are
described in the accompanying Proxy Statement;
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2.
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Approve
2009 Stock Incentive Plan. Approve the General Finance
Corporation 2009 Stock Incentive Plan;
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3.
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Ratification
of Appointment of the Independent Registered Public Accounting
Firm. Ratify the selection of Crowe Horwath LLP as our
independent auditors for the fiscal year ending June 30, 2010;
and
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4.
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Other
Business. Transact any other business that may properly
be presented at the Annual Meeting.
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If you
owned common stock of General Finance Corporation on October 9, 2009, the record
date, you are entitled to attend and vote at the Annual Meeting. A complete list
of stockholders entitled to vote at the Annual Meeting will be available at the
principal executive offices of General Finance Corporation located at 39 East
Union Street, Pasadena, California beginning November 30, 2009 and at the
Annual Meeting.
The proxy
statement that accompanies this Notice contains additional information regarding
the proposals to be considered at the Annual Meeting, and stockholders are
encouraged to read it in its entirety. Under rules adopted by the Securities and
Exchange Commission ("SEC"), we have elected to provide access to our proxy
materials both by sending you the accompanying proxy statement and proxy card
and by notifying you of the availability of our proxy statement and our 2009
annual report to stockholders at the website www.cstproxy.com/generalfinance/2009.
Web access to our proxy materials does not identify visitors to the
website.
If you
submit a proxy, you are entitled to revoke your proxy at any time before it is
exercised by attending the Annual Meeting and voting in person, duly executing
and delivering a proxy bearing a later date, or sending written notice of
revocation to our Secretary at the Company’s address. Whether or not you plan to
be present at the Annual Meeting, we encourage you to vote your proxy by
following the instructions provided in this proxy statement or on the proxy
card. Any stockholder attending the meeting may vote in person even if he or she
previously has returned a proxy.
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By
Order of the Board of Directors,
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Christopher
A. Wilson
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General
Counsel, Vice President &
Secretary
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October 19,
2009
Important
Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be
Held on December 10, 2009:
Our
proxy statement and our 2009 annual report to stockholders
are
available
at www.cstproxy.com/generalfinance/2009
GENERAL
FINANCE CORPORATION
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
To
be held on Thursday, December 10, 2009
INFORMATION
ABOUT THE ANNUAL MEETING AND VOTING
Why
did you send me this Proxy Statement and proxy card?
We sent
you this Proxy Statement and the enclosed proxy card because you own shares of
common stock of General Finance Corporation, which we refer to herein as "we" or
the "Company." This Proxy Statement, which is furnished by the Board of
Directors of the Company, provides you with information that will help you cast
your vote at the Annual Meeting. You do not need to attend the Annual Meeting to
vote your shares. Instead, you may simply complete, sign, date and return the
enclosed proxy card.
When you
complete, sign, date and return the proxy card, you appoint the proxy holders
named therein (your proxies), as your representatives at the Annual Meeting. The
proxy holders will vote your shares at the Annual Meeting as you have instructed
them on your proxy card(s). If an issue comes up for vote at the Annual Meeting
that is not on the proxy card, the proxy holders will vote your shares, under
your proxy, in accordance with their best judgment.
We began
sending this Proxy Statement, the attached Notice of Annual Meeting and the
enclosed proxy card on October 26, 2009 to all stockholders entitled to vote.
Stockholders who owned Common Stock on October 9, 2009 (the record date) are
entitled to vote. On the record date, there were 17,826,052 shares of Common
Stock outstanding. The Common Stock is our only class of voting stock
outstanding.
We have
enclosed our Annual Report to Stockholders, which includes our Form 10-K for the
fiscal year ended June 30, 2009 as filed with the SEC. The Annual Report is
not to be considered part of the soliciting materials.
What
am I voting on?
We ask
you to vote on the election of two Class C directors, the approval of the
General Finance Corporation 2009 Stock Incentive Plan and the ratification of
the selection of Crowe Horwath LLP as our independent auditors for the fiscal
year ended June 30, 2010. The sections entitled “Election of Directors,”
"Approval of 2009 Stock Incentive Plan" and “Ratification of Selection of
Independent Auditors” give you more information on these proposals.
At the
time this Proxy Statement was printed, we knew of no other matters to be acted
on by the stockholders at the Annual Meeting.
How
many votes do I have?
You have
one vote for each share of our Common Stock you own.
How
are abstentions and broker non-votes treated?
Abstentions
and broker non-votes will be included in the number of shares present at the
Annual Meeting for purposes of determining the presence of a quorum. Abstentions
and broker non-votes will not be counted either as a vote cast for or against in
the election of directors or the ratification of selection of independent
auditors.
How
can I vote?
You
may vote by Internet
You can
vote via the Internet by following the instructions in your enclosed proxy card,
notice and/or voting instructions form.
You
may vote by telephone
You can
vote by telephone by following the instructions in your enclosed proxy card,
notice and/or voting instruction form.
You
may vote by mail
You can
vote by mail by completing, signing and dating the enclosed proxy card and
returning it promptly in the envelope provided. If you mark your voting
instructions on the proxy card, your shares will be voted as you instruct. If
you return a signed proxy card but do not provide voting instructions, your
shares will be voted FOR the election of the nominees for directors, FOR
approval of the 2009 Stock Incentive Plan and FOR the ratification of the
selection of independent auditors identified in this Proxy
Statement.
You
may vote in person at the Annual Meeting
You may
attend the Annual Meeting and vote in person. If you hold your shares in street
name, you must request a legal proxy from your stockbroker in order to vote at
the Annual Meeting. Otherwise, we cannot count your votes.
Please
see the notice or voting instruction form your bank, broker or other holder of
record provided you for more information on these options.
May
I revoke my proxy?
Yes, you
can change or revoke your proxy by Internet, telephone or mail, by notifying our
Secretary in writing at our corporate headquarters before the Annual Meeting
that you have revoked your proxy or by attending the Annual Meeting and voting
in person.
How
will shares I hold in street name be voted?
If your
shares are held in street name, your brokerage firm, under certain
circumstances, may not vote your shares without specific voting instructions
under rules of The NASDAQ Stock Market, Inc. ("NASDAQ"). If you do not vote your
proxy, your brokerage firm will leave your shares unvoted.
We
encourage you to provide instructions to your brokerage firm by voting your
proxy. This ensures your shares will be voted at the Annual
Meeting.
What
does it mean if I receive more than one proxy card?
If you
have more than one account at the transfer agent and/or with stockbrokers, you
will receive separate proxy cards for each account. Please sign and return all
proxy cards to ensure that all your shares are voted.
How
many votes may be cast at the Annual Meeting?
Based on
the number of shares of Common Stock outstanding on the record date, up to
17,826,052 votes may be cast on any matter.
How
many shares do you need to hold the Annual Meeting (what are the quorum
requirements)?
Shares
representing a majority of our outstanding votes on the record date of October
9, 2009 must be present at the Annual Meeting in order to hold the Annual
Meeting and conduct business. This is called a quorum. Accordingly, a quorum
will be 8,913,027 shares.
Shares
are counted as present at the Annual Meeting if the stockholder
either:
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is
present at the Annual Meeting; or
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has
properly submitted a proxy card.
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Who
nominates individuals for election to the Board of Directors?
Nominations
for the election of individuals to the Board of Directors may be made by the
Board of Directors or by any holder of our voting stock.
How
many votes must the director nominees have to be elected?
The two
nominees receiving the highest number of votes will be elected as directors.
This number is called a plurality. If you do not vote for a particular nominee,
or you withhold authority to vote for a particular nominee on your proxy card,
your vote will not count either “for” or “against” the nominee.
How
many votes are required to ratify the selection of auditors?
The
selection of Crowe Horwath LLP will be ratified if a majority of the votes cast
on the selection are in favor of ratification.
How
many votes are required to approve the General Finance Corporation 2009 Stock
Incentive Plan?
The
General Finance Corporation 2009 Stock Incentive Plan will be approved if a
majority of the votes cast are in favor of its approval.
Who
pays the costs of soliciting these proxies?
The
Company pays for distributing and soliciting proxies and reimburse the
reasonable fees and expenses of brokers, nominees, fiduciaries and other
custodians in forwarding proxy materials to stockholders. The directors,
officers and regular employees of the Company may solicit proxies in person,
through mail, telephone or other means. We do not pay those individuals
additional compensation for soliciting proxies.
PROPOSAL
1:
ELECTION
OF DIRECTORS
Pursuant
to our Amended and Restated Certificate of Incorporation, the Board of Directors
must consist of no less than three members, the exact number of which is
determined from time to time by the Board of Directors, divided into three
classes designated Class A, Class B and Class C, respectively.
The Board of Directors has presently fixed the number of directors at
seven.
The terms
of the Class A directors will expire as of the annual meeting of
stockholders in 2010, the terms of Class B Directors will expire as of the
annual meeting of stockholders in 2011 and the term of the Class C
Directors will expire as of the 2009 Annual Meeting. Upon expiration of the
terms of the Directors of each class as set forth above, the terms of their
successors in that class will continue until the end of their terms and until
their successors are duly elected and qualified.
The Board
of Directors has nominated the two current Class C directors for
re-election by the stockholders. Each nominee has indicated that he is willing
to serve as a director. If any nominee is unable to serve or for good cause will
not serve, your proxy holders may vote for another nominee proposed by the Board
of Directors. If any director resigns, dies or is otherwise unable to serve out
his or her term, the Board of Directors may fill the vacancy until the next
annual meeting.
Information
About the Nominees and Directors
The following information is provided regarding the
nominees and the continuing directors:
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Term
to
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Name
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Age
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Director
Since
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Expire
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Nominees—Class C
Directors:
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Ronald
F. Valenta
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50
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2005
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2009
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Ronald
L. Havner, Jr.
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51
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2008
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2009
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Class A
Directors:
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David
M. Connell
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65
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2005
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2010
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Manuel
Marrero
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51
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2005
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2010
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Class B
Directors:
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Lawrence
Glascott (Chairman)
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75
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2005
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2011
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James
B. Roszak
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2005
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2011
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Susan
Harris
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2008
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2011
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Ronald F. Valenta has served
as a director and as our Chief Executive Officer since our inception. He served
as our Chief Financial Officer from inception through September 2006 and as
our Secretary from inception through December 2007. Mr. Valenta has
been the Chairman of General Finance Group, Inc. since 2008. From 1988 to 2003
Mr. Valenta served as the President and Chief Executive Officer of Mobile
Services Group, Inc., a portable storage company he founded. From 2003 to 2006
Mr. Valenta was a director of the National Portable Storage Association, a
storage industry non-profit organization. From 1985 to 1989, Mr. Valenta
was a Senior Vice President of Public Storage, Inc.
Ronald L. Havner, Jr. became
a director on October 1, 2008. Mr. Havner has been the Vice-Chairman,
Chief Executive Officer and a member of the Board of Public Storage, Inc. since
November 2002 and President since July 1, 2005. Mr. Havner joined
the Public Storage, Inc. in 1986 and held a variety of senior management
positions until his appointment as Vice-Chairman and Chief Executive Officer in
2002. Mr. Havner has been Chairman of the Public Storage’s affiliate, PS
Business Parks, Inc. (PSB), since March 1998 and was Chief Executive
Officer of PSB from March 1998 until August 2003. He is also a member
of the Board of Governors and the Executive Committee of the National
Association of Real Estate Investment Trusts, Inc. (NAREIT).
David M. Connell has been a
director since November 2005. In 1999 Mr. Connell founded Cornerstone
Corporate Partners, LLC, a consulting and advisory firm. Prior to establishing
Cornerstone Corporate Partners in 1999, Mr. Connell served as President and
a member of the Board of Directors for Data Processing Resources Corporation, or
DPRC, from 1992 to 1999. DPRC was a NASDAQ listed provider of information
technology consulting services to Fortune 500 companies. Prior to his services
with DPRC, from 1988 to 1993, Mr. Connell was engaged by Welsh, Carson,
Anderson; Stowe, a New York private equity firm, to manage a group of portfolio
companies. From 1990 to 1993, Mr. Connell served as Chairman and Chief
Executive Officer of Specialized Mortgage Service, Inc., an information
technology company serving the real estate, banking, and credit rating
industries. From 1988 to 1990, he served as Chairman and Chief Executive Officer
of Wold Communications, Inc., which later merged and became Keystone
Communications, a leading satellite communications service
provider.
Manuel Marrero has been a
director since November 2005. Since March 2009 Mr. Marrero has served as
the Chief Executive Officer of ACAC, Inc., a company controlled by Ronald
Valenta. From January 2004 to March 2009, Mr. Marrero has worked as a
financial and operations management consultant with several companies,
principally focused in consumer products brand management. From May 2002
until January 2004, Mr. Marrero served as the Chief Financial Officer
of Mossimo, Inc., a designer and licensor of apparel and related products. From
1999 to 2001, Mr. Marrero was the Chief Operating Officer and Chief
Financial Officer of Interplay Entertainment Corp., a developer, publisher and
distributor of interactive entertainment software, and the Chief Financial
Officer of Precision Specialty Metals, Inc. from 1996 to 1999, a light gauge
conversion mill for flat rolled stainless steel and high performance alloy. He
has served on the boards of Interplay OEM, Inc., Shiney Entertainment, Inc.,
Seed Internet Ventures, Inc., L.A. Top Producers, LLC, Friends of Rancho San
Pedro and Tree People.
Lawrence Glascott has been
our Chairman of the Board of Directors since November 2005.
Mr. Glascott has served as a director of 99¢ Only Stores since 1996 where
he currently serves on its Audit, Compensation and Nominating and Corporate
Governance Committees. From 1991 to 1996 he was the Vice President — Finance of
Waste Management International, an environmental services company. Prior
thereto, Mr. Glascott was a partner at Arthur Andersen LLP and was in
charge of the Los Angeles-based Arthur Andersen LLP Enterprise Group practice
for over 15 years.
James B. Roszak has been a
director since November 2005. Mr. Roszak has been a director of
National RV Holdings, Inc. since June 2003. Mr. Roszak was employed by
the Life Insurance Division of Transamerica Corporation, a financial services
organization engaged in life insurance, commercial lending, leasing and real
estate services, from June 1962 through his retirement as President of such
division in June 1997. Mr. Roszak also served as interim Chief
Executive Officer and a director of buy.com, an Internet retailer, from
February 2001 through August 2001. He is a member of the Board of
Trustees of Chapman University.
Susan Harris has been a
director since November 2008. Ms. Harris served as a director of Mobile
Services Group, Inc. and Mobile Storage Group, Inc., portable storage companies,
from May 2004 to August 2006 and from May 2002 to August 2006, respectively.
Ms. Harris retired from Sun America, Inc. where she served in a variety of
positions between 1985 and 2000, including Senior Vice President and General
Counsel. She earned her J.D. Degree from the University of Southern
California and her B.A. degree from the University of California, Los
Angeles.
Director
Independence
NASDAQ
requires that a majority of the members of the Board of Directors be
“independent directors,” which is defined generally as a person other than an
officer or employee of the Company or its subsidiaries or any other individual
having a relationship, which, in the opinion of the Company’s Board of
Directors, would interfere with the director’s exercise of independent judgment
in carrying out the responsibilities of a director.
Ms.
Harris and Messrs. Connell, Glascott and Roszak are “independent
directors.”
Board
and Committee Meetings
The Board
of Directors held nine meetings during the fiscal year ended June 30, 2009,
or fiscal year 2009. Each director attended more than 75% of all meetings of the
Board of Directors and board committees on which he or she served during the
period he or she was a director in fiscal year 2009.
Board
Committees
The Board
of Directors has an Audit Committee, a Compensation Committee and a Nominating
and Governance Committee.
Audit
Committee. The
Audit Committee consists of Mr. Roszak, as Chairman, Mr. Connell and Mr.
Glascott. Mr. Roszak and Mr. Glascott each qualify as an “audit committee
financial expert,” as defined in the rules and regulations of the Securities and
Exchange Commission. In addition, we have certified to NASDAQ that the committee
has, and will continue to have, at least one member who has past employment
experience in finance or accounting, requisite professional certification in
accounting, or other comparable experience or background that results in the
individual’s financial sophistication. Each member of the Audit Committee is an
independent director under NASDAQ listing standards.
The
functions of the Audit Committee and its activities during fiscal year 2009 are
described below under the heading “Report of the Audit Committee.”
The Board
of Directors has adopted a written charter for the Audit Committee, and the
Audit Committee within the past year has reviewed and assessed the adequacy of
the charter. A copy of the Audit Committee Charter is available free of charge
on the “Corporate Governance” section in our website at www.generalfinance.com or
by written request addressed to our Secretary.
The Audit
Committee met eight times in fiscal year 2009.
Compensation
Committee. The
Compensation Committee consists of Mr. Connell, as Chairman, Ms. Harris and
Mr. Roszak, each of whom is an independent director under NASDAQ listing
standards.
The
purposes of the Compensation Committee are: (i) to determine and approve
the goals, objectives and compensation structure for our executive officers;
(ii) to review the performance of our executive officers; and (iii) to
review the Company’s management resources, succession planning and development
activities.
The Board
of Directors established the Compensation Committee in May 2006, and the
Compensation Committee adopted its charter in February 2007 and amended its
charter in September 2009. A copy of the Compensation Committee Charter is
available free of charge on the “Corporate Governance” section in our website at
www.generalfinance.com or
by written request addressed to our Secretary.
The
Compensation Committee met four times in fiscal year 2009.
Nominating and
Governance Committee. The Nominating and
Governance Committee consists of Ms. Harris, as Chairwoman, Mr. Connell and Mr.
Roszak.
The
Nominating and Governance Committee is responsible for certain matters which
include reviewing the size and composition of the Board of Directors, overseeing
the selection of persons to be nominated to serve on our Board of Directors and
maintaining and overseeing the corporate governance of the Company.
The Board
of Directors adopted a written charter for the Nominating and Governance
Committee in January 2006 and amended its charter in September 2009. A copy
of the Nominating and Governance Committee Charter is available free of charge
on the “Corporate Governance” section in our website at www.generalfinance.com or
by written request addressed to our Secretary.
The
Nominating and Governance Committee met twice in fiscal year
2009.
The
Nominating and Governance Committee seeks to achieve a balance of knowledge,
experience and capability on the Board of Directors. When considering candidates
for director, the Nominating and Governance Committee takes into account a
number of factors, including the following:
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Ethics
and integrity;
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Ability
to attend regular and special board and committee meetings and willingness
to perform the duties of a director;
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Excellent
moral character and reputation;
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Industry
knowledge, contacts and network of potential clients in industries served
by the Company;
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Ability
to be responsible and fair-minded;
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•
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Prior
experience on boards of directors;
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•
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Senior-level
management experience; and
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•
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Possession
of specific skills in auditing, accounting, personnel and
finance.
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Candidates
need not possess all of these characteristics, nor are all of these factors
weighed equally.
The
Nominating and Governance Committee periodically assesses the appropriate size
of the Board of Directors and whether any vacancies on the Board of Directors
are expected due to retirement or otherwise. If vacancies are anticipated or
arise, or the size of the Board of Directors expands, the Nominating and
Governance Committee will consider various potential candidates for director.
Candidates may come to the attention of the Board of Directors through current
Board of Directors members or management, stockholders or other persons. These
candidates will be evaluated at regular or special meetings of the Nominating
and Governance Committee and may be considered at any point during the
year.
The
Nominating Committee will consider candidates for directors recommended by
stockholders who follow the proper procedures in submitting the recommendation.
The Board of Directors will consider candidates recommended by stockholders
using the same criteria it applies to candidates recommended by directors. To be
considered for election at an annual meeting, the recommendation must be
submitted no later than November 5, 2009. The recommendation must by in
writing addressed to the Corporate Secretary and must include the following:
(i) statement that the writer is a stockholder and is proposing a candidate
for consideration by the Nominating Committee; (ii) name and contact
information for the candidate; (iii) statement of the candidate’s business
and educational experience; (iv) information regarding each of the factors
listed above (other than the factor regarding board size and composition)
sufficient to enable the Nominating Committee to evaluate the candidate;
(v) statement detailing any relationship between the candidate and any
competitor of the Company; (vi) detailed information about any relationship
or understanding between the writer and the candidate; and (vii) statement
that the candidate is willing to be considered and is willing to serve as a
director if nominated and elected.
Compensation
Committee Interlocks and Insider Participation
No person
who served on the Compensation Committee in fiscal year 2009 was during the year
or previously an officer or employee of the Company or had a relationship with
the Company requiring disclosure under Item 404 of
Regulation S-K. Since March 2009 Mr. Marrero has served as the
Chief Executive Officer of the specialty finance companies of General Finance
Group, Inc., a company controlled by Ronald Valenta. Mr. Valenta has the
power to set Mr. Marrero's incentive compensation. No other interlocking
relationship exists between any member of the Board of Directors and any member
of any other company’s board of directors or compensation
committee.
Compensation
of Directors
We currently have six non-employee directors that qualify for
compensation.
The
following table provides information concerning the compensation of the
directors for fiscal year 2009:
Director
Compensation
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Fees
Earned
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or
Paid in
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Name
|
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Cash
($)
|
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Total
($)
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Lawrence
Glascott
|
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$
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64,000
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$
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64,000
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|
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David
M. Connell
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$
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60,250
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$
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60,250
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Manuel
Marrero
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$
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50,250
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$
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50,250
|
|
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|
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James
B. Roszak
|
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$
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61,500
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$
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61,500
|
|
|
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Ronald
L. Havner, Jr.
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$
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22,500
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$
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22,500
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|
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Susan
Harris
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$
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43,774
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$
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43,774
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Ronald
F. Valenta
|
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$
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—
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$
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—
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In
September 2007, our Board of Directors approved a new schedule of
compensation of our non-employee directors effective upon completion of the
acquisition of Royal Wolf. The following table summarizes the schedule of
compensation of our non-employee directors (directors who also serve as officers
currently receive no additional compensation for their services as directors).
In addition to the compensation set forth below, each director is also eligible
for reimbursement of reasonable expenses incurred in connection with the
director’s services.
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Annual
Retainer—Chairman of the Board
|
|
$
|
40,000
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Annual
Retainer—Other Directors
|
|
$
|
30,000
|
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Additional
Annual Retainer — Audit Committee Chair
|
|
$
|
10,000
|
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Additional
Annual Retainer — Compensation Committee Chair
|
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$
|
7,500
|
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Additional
Annual Retainer — Nominating Committee Chair
|
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$
|
3,000
|
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Board
Meeting Attendance Fee—Chairman of the Board
|
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$
|
2,000
|
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Board
Meeting Attendance Fee—Other Directors
|
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$
|
1,500
|
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Committee
Meeting Attendance Fee
|
|
$
|
750
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Telephonic
Meeting Attendance Fee
|
|
$
|
500
|
|
The
annual retainers are payable in advance in semiannual increments on June 30
and December 31.
Director
Attendance at Annual Meetings
We have
scheduled a board meeting in conjunction with our Annual Meeting and expect that
our directors will attend, absent a valid business or personal reason not to
attend.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE BOARD
NOMINEES.
PROPOSAL 2:
APPROVAL
OF THE 2009 STOCK INCENTIVE PLAN
The Board of Directors has unanimously approved the 2009 Stock Incentive Plan
(“2009 Plan”), subject to stockholder approval at the Annual Meeting. The Board
of Directors is requesting that our stockholders approve the 2009 Plan because
the Board believes the 2009 Plan is in our best interest and the interests of
our stockholders. The following summary of certain features of the 2009 Plan is
qualified in its entirety by reference to the actual text of the 2009 Plan,
which is attached as Appendix A to
this proxy statement.
Description of
the 2009 Plan. The 2009 Plan is an “omnibus” incentive plan permitting a
variety of equity programs designed to provide flexibility in implementing
equity and cash awards, including incentive stock options, nonqualified stock
options, restricted stock grants, restricted stock units, stock appreciation
rights, performance stock, performance units and other stock-based awards.
Participants in the 2009 Plan may be granted any one of the equity awards or any
combination of them, as determined by the Board or the Compensation Committee.
The following is a summary of the principal provisions of the 2009 Plan.
Purpose of the
2009 Plan; Shares Available for Issuance. The purpose of the 2009 Plan is
to provide a means for employees and directors to develop ownership in and
commitment to our growth and financial success. We believe this ownership will
motivate our employees and directors to devote their best efforts to our
business, thereby advancing the interests of our stockholders. The 2009 Plan
will also enable us to attract able individuals to become employees or serve as
directors.
As of June 30, 2009, we have reserved 1,142,000 shares of common stock for
issuance under the 2009 Plan. As of October 9, 2009, there were 17,826,052
shares of our common stock outstanding.
2006 Stock
Option Plan. Upon the adoption of the 2009 Plan, the Company will suspend
further grants under the General Finance Corporation 2006 Stock Option Plan
(“2006 Plan”). The section below entitled "Outstanding Options" sets forth the
number of options available for grant under the 2006 Plan as of June 30, 2009.
Any stock options which are forfeited under the 2006 Plan will become available
for grant under the 2009 Plan, but the total number of shares available under
the 2006 Plan and the 2009 Plan will not exceed the 2,500,000 shares reserved
for grant under the 2006 Plan, as previously approved by stockholders. The 2006
Plan will expire on August 29, 2016, which is the tenth anniversary of the date
on which it was originally adopted by the Board of Directors. Under the 2006
Plan, the Compensation Committee of the Board of Directors may grant stock
options and awards of restricted stock to our employees.
Limits on
Awards. A maximum of 2,500,000 shares of common stock may be issued
and awarded under the 2009 Plan. The maximum number of shares of common stock
that may be subject to stock awards granted to any one participant who received
an award under the 2009 Plan (“Participant”) during any single fiscal year
period is 250,000. We may not issue fractional shares of common stock and will
round down to the nearest whole share of common stock.
If
any award shall terminate by expiration, forfeiture, cancellation, or otherwise
without the issuance of any common stock, is settled in cash in lieu of shares
of common stock, or is exchanged with the Compensation Committee’s permission
for awards not involving common stock, such common stock subject to the award
shall be available again for grant under the 2009 Plan. Fractional shares of
common stock will be rounded down to the nearest whole share of common stock.
Administration. Our Board of Directors has delegated administration of
the 2009 Plan to the Compensation Committee. The members of the Compensation
Committee shall be appointed from time to time by and shall serve at the
discretion of the Board and, unless otherwise determined by the Board, the
Compensation Committee shall consist of no fewer than two directors, each of
whom is (i) a “Non-Employee Director” within the meaning of Rule 16b-3
(or any successor rule) of the Securities and Exchange Act of 1934, as amended
("Exchange Act"), (ii) an “outside director” within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"),
and (iii) an “independent director” for purposes of the rules and
regulations of NASDAQ.
The Compensation Committee will have such powers and authority as may be
necessary or appropriate to carry out the functions of the Compensation
Committee as described in the 2009 Plan. Subject to the express limitations of
the 2009 Plan, the Compensation Committee will have authority in its discretion
to determine the individuals to whom, and the time or times at which, awards may
be granted, as well as the terms and provisions of individual awards, including
without limitation:
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•
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the
number of shares, units or other rights subject to each
award;
|
|
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|
|
•
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the
exercise, base or purchase price of an award (if any);
|
|
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|
|
•
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the
time or times at which an award will become vested, exercisable or
payable, the performance goals and other conditions of an
award;
|
|
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|
|
•
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the
duration of the award; and
|
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|
|
•
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all
other terms of the award.
|
The Compensation Committee shall have full and exclusive discretionary power to
interpret the terms and intent of the 2009 Plan and any award agreement or other
agreement in connection with the 2009 Plan. The Compensation Committee shall
also have the full and exclusive discretionary power to adopt such rules,
regulations, forms, instruments, and guidelines for administering the 2009 Plan
as the Compensation Committee may deem necessary or proper. The Compensation
Committee may delegate such responsibilities to another committee of the Board
of Directors, an officer of the Company or such person as the Committee may
designate.
The Compensation Committee may, at any time and from time to time, alter, amend,
modify, suspend, or terminate the 2009 Plan or any award agreement. Subject to
anti-dilution adjustment provisions in the 2009 Plan, without the prior approval
of our stockholders, neither the Compensation Committee nor the Board of
Directors may amend the 2009 Plan or any award to:
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•
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increase
the number of shares that may be issued under the 2009
Plan;
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•
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amend
the maximum number of shares subject to awards that may be granted during
a fiscal year;
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•
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permit
granting of stock options or stock appreciation rights at a price below
the market value of our common stock on the date of the
grant;
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•
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make
any other amendments or modifications which require stockholder approval
under applicable law or the rules of
NASDAQ.
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No termination or amendment of the 2009 Plan may be made without the consent of
the Participants whose awards would experience a material adverse effect.
Eligibility. Any person, who is an employee of us or any of our
subsidiaries or any director, is eligible to receive awards and become a
Participant under the 2009 Plan. There are approximately 430 individuals
currently eligible to participate under the 2009 Plan.
Types of Plan
Awards. The 2009 Plan includes the following equity compensation awards:
incentive stock options, nonqualified stock options, restricted stock grants,
restricted stock units, stock appreciation rights, performance stock,
performance units, cash and stock-based awards, the material terms of each are
described below.
Stock Options. Stock options
granted under the 2009 Plan may be either incentive stock options or
nonqualified stock options. The award agreement for an option grant shall set
forth the terms and provisions of the award, including the exercise price per
share, the maximum duration of the option, the number of shares of common stock
to which the option pertains, and the conditions upon which an option shall
become vested and exercisable.
The exercise price per share of an option may not be less than the fair market
value of our common stock on the date of the grant. The Compensation Committee
may in its discretion specify an exercise price per share that is higher than
the fair market value of our common stock on the date the option is granted. If
a Participant owns more than 10% of our total combined voting power, then the
minimum exercise price for an incentive stock option will be 110% of the fair
market value of our common stock on the date the option is granted. The exercise
price is payable in cash, shares of our common stock previously owned or as
otherwise permitted by the Compensation Committee, including, without
limitation, through a cashless (broker-assisted) exercise.
The Compensation Committee will determine the period during which a vested stock
option may be exercised, provided that the maximum term of a stock option shall
be ten years (or five years, in the case of a Participant who owns in excess of
10% of our total combined voting power) from the date the option is granted.
Each Participant’s award agreement shall set forth the extent to which the
Participant shall have the right to exercise the stock option following
termination of the Participant’s employment with us and/or our
subsidiary.
Stock option awards are nontransferable, other than by will or by the laws of
descent and distribution. However, in appropriate circumstances, and only if
explicitly noted in the award agreement and permissible by law, the Compensation
Committee may provide for transferability of stock options.
Stock Appreciation Rights. A
stock appreciation right entitles a Participant, upon settlement, to receive
shares of common stock, a payment or a combination of shares of common stock and
a payment based on the increase of the value of our common stock from the time
the stock appreciation right is granted until the time it is exercised (or
settled). The terms and conditions of an award will be set forth in an award
agreement, except that payment may only be made in our common stock. Stock
appreciation rights may be granted on a basis that allows for the exercise of
the right by the Participant or that provides for the automatic payment of the
right upon a specified date or event. Stock appreciation rights will be
exercisable or payable at such time or times and upon conditions as may be
specified by the Compensation Committee in the award agreement, provided that
the Compensation Committee may accelerate the exercisability or payment of a
stock appreciation right at any time, including without limitation, in
connection with a change of control or upon the death or disability of the
Participant.
A stock appreciation right may, but need not, be granted in tandem with a stock
option, either at the time of grant or at any time thereafter during the term of
the stock option. A tandem stock option/stock appreciation right will entitle
the holder to elect, as to all or any portion of the number of shares subject to
such stock option/stock appreciation right, to exercise either the stock option
or the stock appreciation right, resulting in the reduction of the corresponding
number of shares subject to the right so exercised as well as the tandem right
not so exercised. A stock appreciation right granted in tandem with a stock
option hereunder will have an exercise price per share equal to the per share
exercise price of the stock option, which under the 2009 Plan shall not be less
than 100 percent of the fair market value of the shares of our common stock
on the date the right is granted, and will be vested and exercisable at the same
time or times that a related stock option is vested and exercisable and will
expire no later than the time at which the related stock option
expires.
A stock appreciation right will entitle the holder, upon exercise or other
payment of the stock appreciation right, as applicable, to receive an amount
determined by multiplying: (i) the excess of the fair market value of a
share of our common stock on the date of exercise or payment of the stock
appreciation right over the exercise price of such stock appreciation right, by
(ii) the number of shares as to which such stock appreciation right is
exercised or paid. The award agreement governing the stock appreciation right
may provide for settlement in cash, common stock or a combination of cash and
common stock.
Awards
made under the 2009 Plan involving deferrals of income, including stock
appreciation rights, must satisfy the requirements of Section 409A of the
Code to avoid adverse tax consequences to Participants. These requirements
include limitations on election timing, including the timing of exercise of
stock appreciation rights, acceleration of payments, and distributions of awards
and award proceeds. We intend to structure any awards under the 2009 Plan,
including awards of stock appreciation rights, to meet the applicable tax law
requirements in Code Section 409A in order to avoid the adverse tax
consequences to Participants.
Except as otherwise provided in a Participant’s award agreement or otherwise
determined at any time by the Compensation Committee, stock appreciation rights
may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution.
Restricted Stock Awards.
Restricted stock awards represent shares of our common stock granted subject to
restrictions on transfer and vesting requirements as determined by the
Compensation Committee. The restrictions imposed on shares granted under a
restricted stock award will lapse in accordance with the vesting requirements
specified by the Compensation Committee in the award agreement, provided that
the Compensation Committee may accelerate the vesting of a restricted stock
award at any time, including, without limitation, in connection with a change of
control or upon the death or disability of the Participant. Such vesting
requirements may be based on the continued service of the Participant with us or
our subsidiaries for a specified time period (or periods) or on the attainment
of specified performance goals established by the Compensation Committee in its
discretion. Restricted Stock awards will be subject to a vesting period as
determined by the Compensation Committee. If the vesting requirements of a
restricted stock award are not satisfied prior to the termination of the
Participant’s service, the award will be forfeited and the shares of common
stock subject to the award will be returned to us.
Shares of common stock granted under any restricted stock award may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until all
applicable restrictions are removed or have expired, except as provided in the
restricted stock award agreement or otherwise allowed by the Compensation
Committee. Holders of restricted stock will have all other rights of a
stockholder with respect to shares of common stock, including the right to vote
the shares and receive any dividends paid on common stock.
Performance Stock and Performance
Units. The Compensation Committee may grant awards of performance stock
or performance units to Participants in such amounts and upon such terms as the
Compensation Committee shall determine. Each share of performance stock shall
have an initial value equal to the fair market value of a share of common stock
on the date of grant. Each performance unit shall have an initial value that is
established by the Compensation Committee at the time of grant. The Compensation
Committee shall set performance goals in its discretion which, depending on the
extent to which they are met, will determine the cash value that will be paid
out to the Participant.
Once the performance stock or performance units vest, the Participant shall be
entitled to receive payout of the value earned by the Participant since the
grant date, to be determined as a function of the extent to which the
corresponding performance goals have been achieved. The Compensation Committee
will pay earned performance stock or performance units in cash equal to the
value of the earned performance stock or performance units at the close of the
applicable vesting period, or as soon as practicable upon vesting. We intend to
structure any performance stock or performance units to meet the applicable tax
law requirements in Code Section 409A in order to avoid adverse tax
consequences to Participants.
Except as otherwise provided in a Participant’s award agreement or otherwise
determined at any time by the Compensation Committee, performance units or
performance stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution.
Cash- and Other Share-Based
Awards. The Compensation Committee may grant cash-based awards to
Participants in such amounts and upon such terms, including the achievement of
performance goals, as the Compensation Committee may determine.
The Compensation Committee may grant other types of equity-based or
equity-related awards not otherwise described by the terms of the 2009 Plan
(including the grant or offer for sale of unrestricted common stock) in such
amounts and subject to such terms and conditions, as the Compensation Committee
shall determine. Such awards may involve the transfer of actual shares of common
stock to Participants, or payment in cash or otherwise of amounts based on the
value of shares of common stock and may include, without limitation, Awards
designed to comply with or take advantage of the applicable local laws of
jurisdictions other than the United States.
We intend to structure any cash-and other share-based awards to meet the
applicable tax law requirements in Code Section 409A in order to avoid
certain adverse tax consequences to Participants.
Non-Employee
Director Awards. Upon election or re-election to the Board of Directors,
each non-employee director will be granted an option to purchase
9,000 shares of common stock at 100% of the fair market value per share as
of the date of the grant. Options to purchase 3,000 shares shall vest on each
anniversary of the date of grant.
Repricings. The Compensation Committee has the authority under the 2009
Plan to reprice any outstanding option or stock appreciation right without the
prior approval of our stockholders. For purposes of the 2009 Plan, “repricing”
includes lowering the exercise price of an option or the grant price of a stock
appreciation right after it is granted and canceling an option at a time when
its exercise price exceeds the fair market value of the underlying stock, in
exchange for an option, a restricted stock award or other equity related
award.
Adjustments. In the event of a stock dividend, recapitalization, stock
split, reverse stock split, spin-off, or other distribution of our stock or
property, the Compensation Committee may, in its sole discretion, in order to
prevent dilution or enlargement of a Participant’s rights under the 2009 Plan,
substitute or adjust the number and kind of shares available for grant under the
2009 Plan, and subject to the various limitations set forth in the 2009 Plan,
the number and kind of shares subject to outstanding awards under the 2009 Plan,
and the exercise, settlement or grant price of awards. In addition, the
Compensation Committee, in its sole discretion, may also make appropriate
adjustments in the terms of any award under the 2009 Plan, including modifying
the performance goals or changing the length of any vesting period, to reflect
such an event.
The impact of a merger or reorganization or other change of control on awards
outstanding under the 2009 Plan shall be specified in the agreement relating to
the award. Such agreement may provide for, among other things, acceleration of
benefits, lapsing of restrictions, vesting of benefits and such other terms and
conditions as may be contained in such written agreement; provided however, that
such written agreement may not increase the maximum amount of any outstanding
award.
Section 162(m) Awards. Awards of options and stock appreciation
rights granted under the 2009 Plan will automatically qualify for the
“performance-based compensation” exception under Code Section 162(m)
pursuant to their expected terms. Cash-based awards and awards of restricted
stock, performance units and stock may qualify under Code Section 162(m) if
the terms of the award state, in terms of an objective formula or standard, the
method of computing the amount of compensation payable under the award and
preclude discretion to increase the amount of compensation payable under the
terms of the award.
Term of 2009
Plan. The 2009 Plan will terminate on September 21, 2019, which is the
tenth anniversary of the date of its adoption by the Board of Directors. The
Board of Directors may, in its discretion and at any earlier date, terminate the
2009 Plan. Notwithstanding the foregoing, no termination of the 2009 Plan will
have a material adverse effect on any award theretofore granted without the
consent of the Participants or the permitted transferee of the award.
Summary of
Material Federal Income Tax Consequences of the 2009 Plan. The following
is a brief summary of certain federal income tax consequences of participation
in the 2009 Plan. The summary should not be relied upon as being a complete
statement of all possible federal income tax consequences. Federal tax laws are
complex and subject to change. Participation in the 2009 Plan may also have
consequences under state and local tax laws which vary from the federal tax
consequences described below. For such reasons, we recommend that each
Participant consult his or her personal tax advisor to determine the specific
tax consequences applicable to him or her.
Incentive Stock Options. No
taxable income will be recognized by a Participant under the 2009 Plan upon
either the grant or the exercise of an incentive stock option. Instead, a
taxable event will occur upon the sale or other disposition of the shares
acquired upon exercise of an incentive stock option, and the tax treatment of
the gain or loss realized will depend upon how long the shares were held before
their sale or disposition. If a sale or other disposition of the shares received
upon the exercise of an incentive stock option occurs more than (i) one
year after the date of exercise of the option and (ii) two years after the
date of grant of the option, the holder will recognize long-term capital gain or
loss at the time of sale equal to the full amount of the difference between the
proceeds realized and the exercise price paid. However, a sale, exchange, gift
or other transfer of legal title of such stock (other than certain transfers
upon the Participant’s death) before the expiration of either of the one-year or
two-year periods described above will constitute a “disqualifying disposition.”
A disqualifying disposition involving a sale or exchange will result in ordinary
income to the Participant in an amount equal to the lesser of
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|
(i) the fair market value of the stock on the date of exercise minus
the exercise price; or
|
|
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|
(ii) the amount realized on disposition minus the exercise
price.
|
If the amount realized in a disqualifying disposition exceeds the fair market
value of the stock on the date of exercise, the gain realized in excess of the
amount taxed as ordinary income as indicated above will be taxed as capital
gain. A disqualifying disposition as a result of a gift will result in ordinary
income to the Participant in an amount equal to the difference between the
exercise price and the fair market value of the stock on the date of exercise.
Any loss realized upon a disqualifying disposition will be treated as a capital
loss. Capital gains and losses resulting from disqualifying dispositions will be
treated as long-term or short-term depending upon whether the shares were held
for more or less than the applicable statutory holding period (which currently
is more than one year for long-term capital gains). We will be entitled to a tax
deduction in an amount equal to the ordinary income recognized by the
Participant as a result of a disposition of the shares received upon exercise of
an incentive stock option.
The exercise of an incentive stock option may result in an “adjustment” for
purposes of the “alternative minimum tax.” Alternative minimum tax is imposed on
an individual’s income only if the amount of the alternative minimum tax exceeds
the individual’s regular tax for the year. For purposes of computing alternative
minimum tax, the excess of the fair market value on the date of exercise of the
shares received on exercise of an incentive stock option over the exercise price
paid is included in alternative minimum taxable income in the year the option is
exercised. A Participant who is subject to alternative minimum tax in the year
of exercise of an incentive stock option may claim as a credit against the
Participant’s regular tax liability in future years the amount of alternative
minimum tax paid which is attributable to the exercise of the incentive stock
option. This credit is available in the first year following the year of
exercise in which the Participant has regular tax liability.
Nonqualified Stock Options.
Generally, no taxable income is recognized by a Participant upon the grant of a
nonqualified stock option. Upon exercise, however, the Participant will
recognize ordinary income in the amount by which the fair market value of the
shares purchased, on the date of exercise, exceeds the exercise price paid for
such shares. The income recognized by the Participant who is our employee is
subject to employment taxes and income tax withholding by us out of the
Participant’s current compensation. If such compensation is insufficient to pay
the taxes due, the Participant will be required to make a direct payment to us
for the balance of the tax withholding obligation. We will be entitled to a tax
deduction equal to the amount of ordinary income recognized by the Participant,
provided that certain reporting requirements are satisfied. If the exercise
price of a nonqualified stock option is paid by the Participant in cash, the tax
basis of the shares acquired will be equal to the cash paid plus the amount of
income recognized by the Participant as a result of such exercise. If the
exercise price is paid by delivering shares of our common stock already owned by
the Participant or by a combination of cash and already-owned shares, there will
be no current taxable gain or loss recognized by the Participant on the
already-owned shares exchanged (however, the Participant will nevertheless
recognize ordinary income to the extent that the fair market value of the shares
purchased on the date of exercise exceeds the price paid, as described above).
The new shares received by the Participant, up to the number of the old shares
exchanged, will have the same tax basis and holding period as the Participant’s
basis and holding period in the old shares. The balance of the new shares
received will have a tax basis equal to any cash paid by the Participant plus
the amount of income recognized by the Participant as a result of such exercise,
and will have a holding period commencing with the date of exercise. Upon the
sale or disposition of shares acquired pursuant to the exercise of a
nonqualified stock option, the difference between the proceeds realized and the
Participant’s basis in the shares will be a capital gain or loss and will be
treated as long-term capital gain or loss if the shares have been held for more
than the applicable statutory holding period (which is currently more than one
year for long-term capital gains).
Restricted Stock. If no
election is made under Code Section 83(b) and repurchase rights are
retained by us, a taxable event will occur on each date the Participant’s
ownership rights vest (e.g., when our repurchase rights expire) as to the number
of shares that vest on that date, and the holding period for capital gain
purposes will not commence until the date the shares vest. Any dividends
received with respect to shares subject to the restrictions will be treated as
additional compensation income and not as dividend income. The Participant will
recognize ordinary income on each date shares vest in an amount equal to the
excess of the fair market value of such shares on that date over the amount paid
for such shares. Any income recognized by a Participant who is an employee will
be subject to employment taxes and income tax withholding by us out of the
Participant’s current compensation. If such compensation is insufficient to
cover the amount to be withheld, the Participant will be required to make a
direct payment to us for the balance of the tax withholding obligation. We are
entitled to a tax deduction in an amount equal to the ordinary income recognized
by the Participant. The Participant’s holding period for capital gains begins on
the date the restrictions on the shares lapse. The Participant’s basis in the
shares will be equal to the purchase price, if any, increased by the amount of
ordinary income recognized. If instead a Code Section 83(b) election is
made not later than 30 days after the date of transfer, then the
Participant will recognize ordinary income on the date of purchase in an amount
equal to the excess of the fair market value of such shares on the date of
purchase over the purchase price paid for such shares. Any change in the value
of the shares after the date of grant will be taxed as a capital gain or capital
loss only if and when the shares are disposed of by the Participant. If the
Section 83(b) election is made, the Participant’s holding period for
capital gains begins on the date of grant. The Section 83(b) election is
irrevocable. If a Section 83(b) election is made and the Participant then
forfeits the restricted stock, the Participant may not deduct as a loss the
amount previously included in gross income. We will be entitled to a deduction
at the same time, and in an amount equal to, the ordinary income recognized by
the Participant with respect to shares of restricted stock.
Stock Appreciation Rights.
Generally, no taxable income is recognized by a Participant receiving a stand
alone non-vested stock appreciation right payable in cash at the time the stock
appreciation right is granted where the Participant is required to exercise the
stock appreciation right at the time it becomes vested. Upon exercise, if the
Participant receives the appreciation inherent in the stock appreciation right
in cash, the cash will be taxed as ordinary income to the Participant at the
time it is received so long as the right is exercised as it becomes vested. If
the Participant receives the appreciation inherent in a stock appreciation right
in stock, the amount of such appreciation will be taxed as ordinary income at
the time it is received. The ordinary income the Participant recognizes will be
subject to employment taxes and income tax withholding by us. If a stock
appreciation right payable in cash is not required to be exercised as it becomes
vested, or if a stock appreciation right payable in stock (i) has a Stock
appreciation right exercise price less than the fair market value of the
underlying stock on date of grant, (ii) is payable in a form other than
shares of our publicly traded stock, or (iii) has a compensation deferral
feature other than deferral of income until the exercise of the right, then such
right may subject a Participant to certain adverse tax consequences under Code
Section 409A, discussed below.
We are not entitled to a federal income tax deduction upon the grant or
termination of a stock appreciation right. However, upon the settlement of a
stock appreciation right, we are entitled to a deduction equal to the amount of
ordinary income the Participant is required to recognize as a result of the
settlement.
Stock Unit Awards. Stock
unit awards are generally includable in income in the year received or made
available to the Participant without substantial limitations or restrictions.
However, depending on their terms, stock unit awards may be subject to Code
Section 409A, discussed below, which in certain circumstances will result
in adverse tax consequences to Participants. Generally, we will be entitled to
deduct the amount the Participant includes in income as a compensation expense
in the year of payment.
Performance Stock and Performance
Unit Awards. Participants generally will not recognize taxable income
upon the granting of performance-based awards. Instead, Participants will
recognize as ordinary income, and we will have as a corresponding deduction, any
cash received in payment of an amount due under the performance-based award. The
ordinary income the Participant recognizes will be subject to employment taxes
and tax withholding by us.
Other Stock-Based Awards.
The tax consequences associated with any other stock-based award will vary
depending on the specific terms of the award, including whether the award has a
readily ascertainable fair market value, whether or not the award is subject to
forfeiture provisions or restrictions on transfer, the nature of the property to
be received by the Participant under the award, the applicable holding period,
the nature of any deferral feature, and the Participant’s tax
basis.
Cash Awards. Awards payable
in cash are includible in the Participant’s gross income when paid and
deductible by us when paid or accrued.
Deferred Compensation. As
noted above in the description of the 2009 Plan, any deferrals made under the
2009 Plan, including awards granted under the plan that are considered to be
deferred compensation, must satisfy the requirements of Code Section 409A
to avoid adverse tax consequences to Participants, which include the current
inclusion of deferred amounts in income and interest and a surtax on any amount
included in income. The Section 409A requirements include limitations on
election timing, acceleration of payments, and distributions. Section 409A
applies to certain stock appreciation rights, stock unit awards, discounted
stock options, and other awards that provide the Participant with an opportunity
to defer to recognition of income. We intend to structure any awards under the
2009 Plan to meet the applicable tax law requirements under Code
Section 409A in order to avoid its adverse tax consequences.
Tax Withholding.
Participants are responsible for payment of any taxes or similar charges
required by law to be withheld from an award or an amount paid in satisfaction
of an award, which shall be withheld from other compensation payable to the
Participant or otherwise paid by the Participant on or prior to the payment or
other event that results in taxable income in respect of an award. The award
agreement may specify the manner in which the withholding obligation shall be
satisfied with respect to the particular type of award.
Non-United States Taxpayers.
If a Participant is subject to the tax laws of any country other than the United
States, the Participant should consult his or her own tax and legal advisors to
determine the tax and legal consequences of any award received under the
Plan.
The foregoing statement is only a summary of the material federal income tax
consequences of the Plan and is based on our understanding of present federal
tax laws and regulations.
Outstanding
Options
The
following table sets forth information concerning outstanding options under the
2006 Plan as of June 30, 2009 for the Annual Meeting:
OUTSTANDING
OPTIONS UNDER
2006
STOCK OPTION PLAN
|
|
|
|
|
|
|
Number
of
|
|
Name
and Position
|
|
Shares
|
|
Ronald
F. Valenta
|
|
|
0
|
|
Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
Charles
E. Barrantes
|
|
|
225,000
|
|
Executive
Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
Christopher
A. Wilson
|
|
|
225,000
|
|
General
Counsel, Vice President and Secretary
|
|
|
|
|
|
|
|
|
|
Robert
Allan
|
|
|
125,000
|
|
Chief
Executive Officer, Royal Wolf
|
|
|
|
|
|
|
|
|
|
Theodore
Mourouzis
|
|
|
125,000
|
|
President,
Pac-Van, Inc.
|
|
|
|
|
|
|
|
|
|
Executive
Group
|
|
|
700,000
|
|
|
|
|
|
|
Non-Executive
Director Group
|
|
|
54,000
|
|
|
|
|
|
|
Non-Executive
Officer Employee Group
|
|
|
604,000
|
|
|
|
|
|
|
|
|
1,358,000
|
|
|
|
|
|
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE GENERAL FINANCE CORPORATION
2009 STOCK INCENTIVE PLAN.
PROPOSAL
3:
RATIFICATION
OF SELECTION OF INDEPENDENT AUDITORS
On
January 19, 2009, the Audit Committee approved the engagement of Crowe Horwarth
LLP, or Crowe, as our new independent registered public accounting firm. The
approval was pursuant to the personnel of Grobstein Horwath & Company LLP,
or GHC, joining Crowe and subsequently notifying us that the GHC legal entity
will no longer serve as our independent registered public accounting
firm.
The Audit
Committee has selected Crowe as our independent auditors for fiscal year 2010.
We are asking the stockholders to ratify this selection. We expect a
representative from Crowe to be present at the Annual Meeting and the
representative will have the opportunity to make a statement if desired and to
respond to appropriate questions by stockholders.
Aggregate
fees billed to us by Crowe and GHC for professional services rendered with
respect to our fiscal year 2009 and aggregate fees billed to us by GHC for
professional services rendered with respect to our fiscal year 2008 were as
follows:
|
|
|
|
|
|
|
GHC
|
|
Crowe
and
GHC
|
|
|
2008
|
|
2009
|
|
|
|
|
|
|
|
|
Audit
Fees
|
|
$ |
433,846 |
|
|
$ |
343,391 |
|
Audit-Related
Fees
|
|
|
28,224 |
|
|
|
22,857 |
|
Tax
Fees
|
|
|
13,669 |
|
|
|
50,247 |
|
All
Other Fees
|
|
|
— |
|
|
|
— |
|
In the
above table, in accordance with the SEC's definitions and rules, “audit fees”
are fees we paid for professional services for the audit of our consolidated
financial statements, including those in our Annual Report on Form 10-K and
local statutory audit requirements, and reviews of our Quarterly Reports on Form
10-Q. “Audit-related fees” are fees for assurance and related services that are
reasonably related to the performance of the audit or review of our financial
statements. “Tax fees” are fees for tax compliance, tax advice and tax
planning.
The
policy of the Audit Committee is that it must approve in advance all services
(audit and non-audit) to be rendered by the Company’s independent auditors. The
Audit Committee approved in advance the engagement of Crowe for services in
fiscal year 2009.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE
SELECTION OF CROWE AS OUR INDEPENDENT AUDITORS FOR FISCAL YEAR
2010.
The
ratification of the selection of Crowe requires the affirmative vote of the
holders of a majority of the number of shares voting on this matter. If the
stockholders do not ratify the selection, the adverse vote will be deemed to be
an indication to the Audit Committee that it should consider selecting other
independent auditors for fiscal year 2010. Because of the difficulty and expense
of substituting accounting firms, it is the intention of the Audit Committee
that the appointment of Crowe for fiscal year 2010 will stand unless, for a
reason other than the adverse vote of the stockholders, the Audit Committee
deems it necessary or appropriate to make a change. The Audit Committee also
retains the power to appoint another independent auditor at any time or from
time to time if it determines it is in our best interests.
REPORT
OF THE AUDIT COMMITTEE
The
following Report of the Audit Committee does not constitute soliciting material
and should not be deemed filed or incorporated by reference into any other
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent the Company specifically
incorporates this Report by reference therein.
The Audit
Committee oversees the financial reporting process on behalf of the Board of
Directors. In fulfilling its oversight responsibilities the Audit Committee
reviewed and discussed the audited financial statements included in the Annual
Report on Form 10-K filed with the SEC and the unaudited financial statements
included with Quarterly Reports on Form 10-Q filed with the SEC.
The Audit
Committee met and discussed with management and the independent auditors the
matters required to be discussed by Statements on Accounting Standards
(SAS) No. 61. These discussions included the clarity of the
disclosures made therein, the underlying estimates and assumptions used in the
financial reporting, and the reasonableness of the significant judgments and
management decisions made in developing the financial statements. In addition,
the Audit Committee has discussed with the independent auditors their
independence from the Company and has received the written letter from the
independent auditors required by Independence Standards Board Standard No.
1.
The Audit
Committee also met and discussed with the independent auditors the overall scope
and objectives of the audit, the Company’s internal controls and critical
accounting policies, and the specific results of the audit. Management was
present at all or some part of each of these meetings.
Pursuant
to the reviews and discussions described above, the Audit Committee recommended
to the Board of Directors that the audited financial statements be included in
the Company’s Annual Report on Form 10-K for the fiscal year ended June 30,
2009.
Management
is responsible for the Company’s financial reporting process, including its
system of internal controls, and for the preparation of consolidated financial
statements in accordance with generally accepted accounting principles. The
Company’s independent auditors are responsible for auditing those financial
statements. The Audit Committee’s responsibility is to monitor and review these
processes. It is neither the Committee’s duty nor responsibility to conduct
auditing or accounting reviews or procedures. Members of the Audit Committee are
not employees of the Company and may not be, and do not represent themselves to
be or to serve as, accountants or auditors by profession or experts in the
fields of accounting or auditing. Therefore, members have relied, without
independent verification, on management’s representation that the financial
statements have been prepared with integrity and objectivity and in conformity
with accounting principles generally accepted in the United States of America
and on the representations of the independent auditors included in their report
on the Company’s financial statements. The Audit Committee’s oversight does not
provide it with an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or policies, or
appropriate internal controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. Furthermore,
consultations and discussions with management and the independent auditors do
not assure that the Company’s financial statements are presented in accordance
with generally accepted accounting principles, that the audit of the Company’s
financial statements has been carried out in accordance with generally accepted
auditing standards or that the Company’s independent accountants are in fact
“independent.”
|
|
|
|
|
|
|
Respectfully
Submitted,
|
|
|
|
|
|
|
|
|
|
James
B. Roszak, Chairman
|
|
|
|
|
Lawrence
Glascott
|
|
|
|
|
David
M. Connell
|
|
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of our
common stock as of October 15, 2009, by (i) each person known by us to
be the beneficial owner of more than 5% of our outstanding shares of common
stock; (ii) each of our executive officers and directors; and
(iii) all of our executive officers and directors as a group. Unless
otherwise noted, we believe that each beneficial owner named in the table has
sole voting and investment power with respect to the shares shown, subject to
community property laws where applicable. An asterisk (*) denotes beneficial
ownership of less than one percent.
|
|
|
|
|
|
|
|
|
|
|
Beneficial
Ownership
|
|
|
|
Number
of
|
|
|
Percent
of
|
|
Name
|
|
Shares(1)
|
|
|
Class(1)
|
|
Ronald
F. Valenta(2)(3)
|
|
|
3,776,805
|
|
|
|
21.2
|
%
|
James
B. Roszak(2)(4)
|
|
|
31,500
|
|
|
|
(*
|
)
|
Lawrence
Glascott(2)(5)
|
|
|
36,200
|
|
|
|
(*
|
)
|
Manuel
Marrero(2)(6)
|
|
|
50,500
|
|
|
|
(*
|
)
|
David
M. Connell(2)(7)
|
|
|
27,500
|
|
|
|
(*
|
)
|
Susan
Harris(2)(8)
|
|
|
3,000
|
|
|
|
(*
|
)
|
Ronald
L. Havner, Jr.(9)
|
|
|
2,562,175
|
|
|
|
14.4
|
%
|
LeeAnn
R. Havner
The
Havner Family Trust
c/o
Karl Swaidan
Hahn
& Hahn LLP
301
East Colorado Boulevard, Suite 900
Pasadena,
California 91101
|
|
|
|
|
|
|
|
|
Charles
E. Barrantes(2)(10)
|
|
|
154,000
|
|
|
|
(*
|
)
|
Christopher
Wilson(2)(11)
|
|
|
114,000
|
|
|
|
(*
|
)
|
Robert
Allan(12)(13)
|
|
|
69,170
|
|
|
|
(*
|
)
|
Theodore
M. Mourouzis(14)(15)
|
|
|
262,463
|
|
|
|
1.5
|
%
|
Gilder,
Gagnon, Howe & Co. LLC(16)
|
|
|
961,720
|
|
|
|
5.4
|
%
|
Olowalu
Holdings, LLC(17)
|
|
|
1,354,571
|
|
|
|
7.6
|
%
|
2863
S. Western Avenue
Palos
Verdes, California 90275
|
|
|
|
|
|
|
|
|
Jonathan
Gallen(18)
|
|
|
1,578,000
|
|
|
|
8.9
|
%
|
299
Park Avenue, 17th
Floor
New
York, New York 10171
|
|
|
|
|
|
|
|
|
Neil
Gagnon(19)
|
|
|
2,423,544
|
|
|
|
13.6
|
%
|
1370
Avenue of the Americas, Suite 2400
New
York, New York 10019
|
|
|
|
|
|
|
|
|
Jack
Silver(20)
|
|
|
2,613,900
|
|
|
|
14.7
|
%
|
SIAR
Capital LLC
660
Madison Avenue
New
York, New York 10021
|
|
|
|
|
|
|
|
|
Brencourt
Advisors, LLC(21)
|
|
|
231,117
|
|
|
|
1.3
|
%
|
600
Lexington Avenue
8
th Floor
New
York, NY 10022
|
|
|
|
|
|
|
|
|
Halcyon
Asset Management LLC
Halcyon
Offshore Asset Management LLC (22)
|
|
|
875,842
|
|
|
|
4.9
|
%
|
477
Madison Avenue
New
York, NY 10022
|
|
|
|
|
|
|
|
|
All
executive officers and directors as a group (eleven
persons)
|
|
|
7,056,313
|
|
|
|
39.6
|
%
|
(1)
|
|
Based
on 17,826,052 shares of common stock outstanding. In accordance with the
rules of the SEC, person is deemed to be the beneficial owner of shares
that the person may acquire within the following 60 days (such as
upon exercise of options or warrants or conversion of convertible
securities). These shares are deemed to be outstanding for purposes of
computing the percentage ownership of the person beneficially owning such
shares but not for purposes of computing the percentage of any other
holder.
|
|
|
|
(2)
|
|
Business
address is c/o General Finance Corporation, 39 East Union Street,
Pasadena, California 91103.
|
|
|
|
(3)
|
|
Includes:
(i) 13,500 shares owned by Mr. Valenta’s wife and minor
children, as to which Mr. Valenta’s shares voting and investment
power with his wife; and (ii) 540,013 shares that may be
acquired upon exercise of warrants. The shares shown exclude the shares
referred to in note (8), below.
|
|
|
|
(4)
|
|
Includes
31,500 shares owned and 3,000 shares that may be acquired upon
exercise of options.
|
|
|
|
(5)
|
|
Includes
36,200 shares owned and 3,000 shares that may be acquired upon
exercise of options.
|
|
|
|
(6)
|
|
Includes
50,500 shares owned and 3,000 shares that may be acquired upon
exercise of options.
|
(7)
|
|
Includes
27,500 shares owned and 3,000 shares that may be acquired upon
exercise of options.
|
(8)
|
|
Includes
3,000 shares that may be acquired upon exercise of
options.
|
(9)
|
|
Information
is based upon Amendment No. 2 to Schedule 13D filed on
October 8, 2008. The shares shown include 2,000 shares as to which
Ronald L. Havner has sole voting power, 3,000 shares as to which his wife,
LeeAnn R. Havner, has sole voting power and 3,000 shares that may be
acquired upon the exercise of stock options. Mr. and Mrs. Havner are
Co-Trustees of The Havner Family Trust. The Trust owns 2,517,425 shares
and 39,750 warrants. As Co-Trustees of the Trust, Mr. and Mrs. Havner
may he deemed to beneficially own all of the shares held by the
Trust.
|
(10)
|
|
Includes
19,000 shares owned and 135,000 shares that may be acquired upon exercise
of stock options.
|
|
|
|
(11)
|
|
Includes
24,000 shares owned and 90,000 shares that may be acquired upon exercise
of stock options.
|
|
|
|
(12)
|
|
Business
address is Suite 201, Level 2, 22-28 Edgeworth David Avenue, Hornsby,
New South Wales, Australia 2077
|
|
|
|
(13)
|
|
Includes
20,170 shares owned and 49,000 shares that may be acquired upon the
exercise of stock options.
|
|
|
|
(14)
|
|
Business
address is 2995 South Harding Street, Indianapolis,
IN 46225.
|
|
|
|
(15)
|
|
Includes
252,463 shares owned and 10,000 shares that may be acquired upon exercise
of stock options.
|
|
|
|
(16)
|
|
Information
is based upon a Schedule 13G filed on April 10, 2009. Gilder, Gagnon,
Howe & Co. LLC is a New York limited liability and broker or dealer
registered under the Securities Exchange Act of 1934. The shares shown
include 28,865 shares as to which Gilder, Gagnon, Howe & Co. LLC has
sole voting power and 932,855 shares as to which it has investment power.
Of these 932,855 shares, 823,762 shares are held in customer accounts
under which partners or employees of Gilder, Gagnon, Howe & Co. LLC
have discretionary authority to dispose or direct the disposition of the
shares, 109,093 shares are held in accounts of its partners and 28,865
shares are held in its profit-sharing plan.
|
|
|
|
(17)
|
|
Information
is based upon an Amendment to Schedule 13G filed on February 13, 2009.
Olowalu Holdings, LLC (“Olowalu”), is a Hawaiian limited liability
company, of which Rick Pielago is the manager. Olowalu shares voting and
investment power as to all of the shares shown with Lighthouse Capital
Insurance Company, a Cayman Islands exempted limited company, and the
Ronald Valenta Irrevocable Life Insurance Trust No. 1, a California
trust, of which Mr. Pielago is trustee. The Ronald Valenta
Irrevocable Life Insurance Trust No. 1 is an irrevocable family trust
established by Ronald F. Valenta in December 1999 for the benefit of
his wife at the time, any future wife, and their descendants.
Mr. Valenta, himself, is not a beneficiary of the Trust, and neither
he nor his wife or their descendants has voting or investment power, or
any other legal authority, with respect to the shares shown.
Mr. Valenta disclaims beneficial ownership of our shares held by the
Trust. Mr. Pielago may be deemed to be the control person of Olowalu
and the Ronald Valenta Irrevocable Life Insurance Trust
No. 1.
|
|
|
|
(18)
|
|
Information
is based upon a Schedule 13G filed on February 17, 2009. The
shares shown are held by Ahab Opportunities, L.P. and Ahab Opportunities,
Ltd.
|
|
|
|
(19)
|
|
Information
is based upon a Schedule 13G filed on February 18, 2009. The
shares shown include: (i) 2,423,544 shares beneficially owned by
Mr. Gagnon; (ii) 901,598 shares beneficially owned by
Mr. Gagnon over which he has sole voting power and shared dispositive
power; and (iii) 1,760,502 shares held for certain customers of
Gagnon Securities LLC, of which Mr. Gagnon is the managing member and
the principal owner and over which he has shared dispositive power but no
voting power.
|
|
|
|
(20)
|
|
Information
is based upon an Amendment to Schedule 13G filed on February 17, 2009. The
shares shown include: (i) 2,600,000 shares that may be acquired upon
exercise of warrants held by Sherleigh Associates Inc. Profit Sharing
Plan, a trust of which Mr. Silver is the trustee; and
(ii) 13,900 shares held by Sherleigh Associates Inc. Profit Sharing
Plan, a trust of which Mr. Silver is a trustee.
|
|
|
|
(21)
|
|
Information
is based upon a Schedule 13G filed on February 12, 2009 as an
Investment Advisor with the Sole dispositive and power to vote or to
direct the vote of 231,117 shares.
|
|
|
|
(22)
|
|
Information
is based upon an Amendment to Schedule 13G filed on February 13,
2009. The shares shown consist of 875,842 shares beneficially owned by
Halcyon Asset Management LLC and Halcyon Offshore Asset Management LLC
over which they have sole voting power and dispositive
power.
|
COMPLIANCE
WITH SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires our directors,
executive officers and 10% stockholders to file reports with the SEC on changes
in their beneficial ownership of common stock and to provide us with copies of
the reports. We believe that all of these persons filed all required reports on
a timely basis in fiscal year 2009.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
of Compensation Philosophy and Objectives
The
Company’s overall compensation program is designed to align the interests of our
executive officers with the interests of our stockholders. We believe the most
effective compensation programs align the interests of executive officers and
stockholders by rewarding the achievement by executive officers of specific
annual goals which fit within the framework of the Company’s strategy and which
increase long-term stockholder value. We structure the compensation
of our executive officers to reward the achievement of the strategic goals that
drive stockholder value.
Executive
Compensation Program
The
Compensation Committee of the Board of Directors is responsible for the
establishment and development of the Company’s compensation philosophy. The
Compensation Committee establishes, implements and monitors the structure of the
Company’s executive compensation program.
The
Compensation Committee designs the executive compensation program based upon the
following key principles:
·
|
Reinforce
the business strategy;
|
·
|
Balance
rewards addressing both short-term and long-term strategic and operational
decisions needed to ensure sustained business performance over
time;
|
·
|
Motivate
executives to deliver a high degree of business performance without
encouraging unnecessary and excessive risk
taking;
|
·
|
Align
executives’ interests with the stockholders’ interests;
and
|
·
|
Attract
and retain talented executives whose skills and achievements will increase
stockholder value.
|
The
Compensation Committee believes the structure and implementation of the
executive compensation program in fiscal year 2009 underlined its compensation
philosophies. When the executive team did not achieve the goals set
by the Company’s business strategy, the compensation of the executives was
reduced. The structure of the non-equity, performance-based incentive
compensation for fiscal year 2009, which awards 60% of annual bonuses based upon
achieving budgetary goals, focuses the executive team on increasing revenues and
profitability, a key element of the Company’s business strategy. The
implementation of the executive compensation program also underlined our
commitment to pay for performance: when the Company missed budgetary goals, the
members of the executive team were not paid 60% of their bonuses. The
executive compensation program therefore reflected the Company’s compensation
philosophies by reducing executive compensation when the Company’s business
goals were not met.
For the
fiscal year 2009, the principal components of compensation for the principal
executive officer, the principal financial officer and the other two most highly
compensated executive officers, or collectively the Named Executive Officers,
were:
|
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|
|
|
1.
|
|
Annual
base salary;
|
|
|
|
|
|
2.
|
|
Non-equity
performance-based incentive compensation; and
|
|
|
|
|
|
3.
|
|
Long-term
equity incentive compensation.
|
In fiscal
year 2009, the Compensation Committee did not retain or rely upon information
provided by any third-party compensation consultant in setting compensation
levels and awards for our Named Executive Officers. Our Compensation Committee
made all final compensation decisions for our Named Executive Officers for
fiscal year 2009.
Elements
of Compensation.
Base
Salaries. Annual base salaries provide executive officers with a
guaranteed minimum level of cash compensation. We believe that paying a base
salary enables us to attract and retain executives and is market practice. We
establish base salaries at levels so that a significant portion of the total
cash compensation such executives can earn is performance-based (through annual
incentive compensation). Base salaries are set based on factors, as applicable,
that include whether a salary level is competitive with comparable companies,
the recommendations of Mr. Valenta for the other Named Executive Officers
and the business judgment of the members of the Compensation Committee, as
discussed further below. The Compensation Committee reviews base salaries
annually for the Named Executive Officers.
Bonuses.
Annual cash bonuses are designed to reward our executive officers, including
each of the Named Executive Officers, for achievement of financial and
operational goals and individual performance objectives to enable us to meet
long and short-term goals. The objectives generally relate to financial factors,
such as growth in earnings before interest, income taxes, depreciation and
amortization and other non-operating costs, or EBITDA, and the achievement of
other corporate, operational and financial goals. Incentive bonuses are
determined annually at the discretion of the Compensation
Committee.
The
Committee’s decision to pay annual cash bonuses for fiscal year 2009 performance
was based upon the Company’s achievement of increases in achievement of
strategic goals. The Compensation Committee predetermined strategic goals for
each Named Executive Officer, assessed the achievement of those goals and
determined actual bonus amounts based upon the recommendations of
Mr. Valenta and their collective business judgment.
Equity-Based
Compensation
Equity
awards of stock options are long-term incentives designed to reward long-term
growth in the stockholder value. Stock options assist in the retention of
executives because they are not exercisable at the time of grant and achieve
their maximum value only if the executive continues to be employed for a period
of years. Stock options have value solely to the extent that the price of our
common stock increases over the exercise price set as of the date of grant. The
Compensation Committee believes that our executive officers should have an
incentive to improve the Company’s performance by having an ongoing stake in the
success of our business. The Compensation Committee seeks to create this
incentive by granting executive officers stock options upon the commencement of
their employment with the Company.
Stock
Options
Stock
options are granted with an exercise price of not less than 100% of the fair
market value of our common shares on the date of grant, so that the executive
officer may not profit from the option unless the price of our common shares
increases. Options granted by the Compensation Committee also are designed to
help us retain executive officers in that options are not exercisable at the
time of grant, and achieve their maximum value only if the executive remains in
the Company’s employ for a period of years.
The
Compensation Committee determines stock option award levels in their discretion,
primarily based on the recommendations of Mr. Valenta and consideration of
an individual’s responsibilities and performance and equity awards at comparable
companies.
Stock
Option Grant Practices
Stock
option grants to all of our executive officers and other employees, including
the Named Executive Officers, must be approved by the Compensation Committee of
the Board, which consists entirely of independent directors. Grants occur only
at meetings of the Compensation Committee and such grants are made effective as
of the date of the meeting or a future date, as in the case of the hiring of a
new employee. Stock option awards are not timed in coordination with the release
of material non-public information. The exercise price of all stock options
granted is equal to the closing market price of our common shares on the date of
grant.
Role of Executive
Officers. In general, Mr. Valenta attends all meetings of the
Compensation Committee at which compensation of the other Named Executive
Officers or compensation policy is reviewed. Mr. Valenta does not vote on
items before the Compensation Committee. The Compensation Committee and the
Board solicit Mr. Valenta’s views on the performance of the executive
officers who report to him.
Compensation
Surveys. Each component of compensation we pay to our Named Executive
Officers—salary, cash bonuses and stock options—is based generally on the
Committee’s subjective assessment of each individual’s role and
responsibilities. Consideration of market rates is an additional factor reviewed
by the Committee in determining compensation levels; we do not “benchmark” or
specifically target certain levels of compensation. For our executive officers,
generally, we determine market compensation rates by reviewing public
disclosures of compensation paid to senior executive officers by other companies
of comparable size and market capitalization. In fiscal year 2009 the comparable
companies reviewed were:
|
|
|
|
|
•
|
|
McGrath
RentCorp;
|
|
|
|
|
|
•
|
|
Mobile
Mini, Inc.; and
|
|
|
|
|
|
•
|
|
Williams
Scotsman, Inc.
|
The
Compensation Committee also bases its payment of base salary and annual bonuses
for Named Executive Officers, other than the chief executive officer, on the
attainment of objectives established by the Compensation Committee, based upon
recommendations from Mr. Valenta. In establishing individual bonuses for
senior executives, the Compensation Committee considers growth in the enterprise
value, common stock price, EBITDA and other financial and corporate objectives,
together with the executive officer’s contribution to the Company’s growth and
profitability.
Compensation
of Executives
The
Compensation Committee sets the base salaries, bonus and equity compensation for
the other Named Executive Officers after consideration of the recommendations
prepared by Mr. Valenta with respect to the appropriate amounts to reward
and incentivize each Named Executive Officer. Mr. Valenta used information
relating to each executive officer’s responsibilities and achievements in
accomplishing the corporate objectives set by the Compensation Committee for the
previous year, his assessment of the individual performance of each Named
Executive Officer and to recommend to the Compensation Committee the annual
incentive bonuses for each of the other Named Executive Officers.
In
June 2009, the Compensation Committee considered the achievement of the
Company’s increased fiscal year 2009 revenues and EBITDA and the recommendations
of Mr. Valenta with respect to the individual performance of the other
Named Executive Officers. The Compensation Committee considered that during
fiscal year 2009, the completion by the Named Executive Officers of certain
strategic and operational initiatives and the oversight of the completion of the
acquisition of Pac-Van and acquisitions by Royal Wolf. None of the Named
Executive Officers received any bonus based upon the achievement of EBITDA
goals.
In
addition, following the failure of Royal Wolf to attain EBITDA targets for
fiscal year 2009, Mr. Allan forfeited stock options to acquire 20,000 shares.
Based on this review and consideration of Mr. Valenta’s recommendations,
Mr. Valenta, at his own election, did not receive a bonus for fiscal year 2009,
but he did receive an expense allowance of $25,000. Mr. Barrantes received his
bonus based on his management of professional fees, cash flows and taxes and his
timely and accurate filing of all public reporting of the Company. The specific
objectives for the payment of Mr. Wilson's bonus included the standardization of
legal agreements and the management of legal counsel. The specific objectives of
Mr. Allan's bonus included the effective management of collections, inventory,
the training of direct reports and the implementation of best practices. Based
on this review and consideration of Mr. Valenta’s recommendations, Mr.
Valenta, at his own election, did not receive a bonus for fiscal year 2009, but
he did receive an expense allowance of $25,000. Following its assessment of
their completion of strategic and operational initiatives, the Compensation
Committee awarded cash bonuses for fiscal year 2009 to Mr. Barrantes of
$45,000, to Mr. Wilson of $45,000 and to Mr. Allan of
AUD$28,700.
Fiscal Year 2010
Executive Officer Annual Base Salaries and Cash Bonus Performance
Targets. In June 2009, after consultation with Mr. Valenta, the
Compensation Committee set fiscal year 2010 annual base salaries and corporate
performance targets for fiscal year 2010 annual cash bonuses for the Named
Executive Officers other than Mr. Valenta. The fiscal year 2010 annual base
salaries of Mr. Barrantes, Mr. Wilson and Mr. Allan remained
unchanged from fiscal year 2009 at $200,000, $200,000 and AUD $350,000,
respectively. The Compensation Committee determined that the corporate
performance targets for annual cash bonuses for fiscal year 2010 performance for
each of the Named Executive Officers would be if the Company achieved specific
EBITDA goals. The Committee believes that the goals, while challenging,
particularly in the current economic environment, are
achievable. Neither the Committee nor Mr. Valenta believe that the
fiscal year 2010 goals will require the Named Executive Officers to take
inappropriate risk in achieving their EBITDA goals.
Severance
Pursuant
to separate employment agreements with Mr. Valenta, Mr. Barrantes and Mr.
Wilson, we will make a severance payment equal to one year’s salary if such
person's employment is terminated by General Finance without cause or by the
employee for good cause, each as defined in their respective employment
agreements.
Each of
these three employment agreements provide that each executive may be terminated
for cause, and General Finance would therefore not be required to pay severance
equal to one year's salary, if such executive breaches his employment agreement,
commits any act of personal dishonesty, fraud or breach of fiduciary duty or
trust, is convicted of or pleads guilty or no contest to any theft, fraud,
breach of fiduciary duty or crime involving moral turpitude or felony, committed
acts which give rise to liability for discrimination or harassment, violates
directions from the board of directors or chief executive officer, acts in a
manner that harms the reputation of General Finance, is found liable of
violating securities or other laws, fails to advance or cooperate with any
investigation by General Finance or misrepresents his experience or employment
history.
Each of
Mr. Valenta, Mr. Barrantes and Mr. Wilson may terminate their employment for
good reason and receive severance equal to one year's salary if General Finance
reduces their base salary, permanently relocates their place of employment more
than 40 miles from their current residence, hires a person to perform the job
functions currently performed by such executive or assigns such executive duties
beneath the duties they ordinarily perform.
We may
also elect to pay six months’ compensation to Mr. Allan in lieu of
providing six months prior notice of termination of his employment. The
employment agreement of Mr. Mourouzis does not provide for the payment of
severance if his employment is terminated without cause, as defined in his
employment agreement.
Perquisites
and Other Personal Benefits
We do not
have programs in place to provide personal perquisites for our executive
officers. We do not have medical or other insurance plans in place at the
Company. Mr. Barrantes and Mr. Wilson participate in the medical and
dental insurance of Pac-Van at the expense of General Finance. Messrs. Valenta,
Barrantes and Wilson are also eligible to participate in the 401(k) retirement
plan of Pac-Van, Inc. Mr. Allan participates in medical and dental
insurance of Royal Wolf at Royal Wolf’s expense, and Royal Wolf contributes to
Mr. Allan’s pension as required by Australian law. We do not have any other
retirement plans under which our executive officers may
participate.
Tax
& Accounting Considerations
Deductibility of
Executive Compensation—Code Section 162(m). Section 162(m) of
the Internal Revenue Code imposes a $1,000,000 limit on the annual deduction
that may be claimed for compensation paid to each of the chief executive officer
and the three other highest paid employees of a publicly held corporation (other
than the chief financial officer). Certain performance-based compensation
awarded under a plan approved by stockholders is excluded from that limitation.
Awards of stock options and our annual cash incentive awards are designed in
general to qualify for deduction as performance-based compensation. However,
while the Compensation Committee considers the tax deductibility of
compensation, the Committee has and may approve compensation that does not
qualify for deductibility in circumstances it deems appropriate to promote
varying corporate goals.
Accounting for
Stock-Based Compensation. For the issuances of stock
options, the Company follows the fair value provisions of SFAS
No. 123R, Share-Based
Payment, or No. 123R. SFAS No. 123R requires
recognition of employee share-based compensation expense in the statements of
income over the vesting period based on the fair value of the stock option at
the grant date. For a discussion of valuation assumptions used in the
calculation of these amounts for fiscal year 2009, see Note 2, “Summary of
Significant Accounting Policies,” and Note 9, “Stock Option Plans,” of the Notes
to Consolidated Financial Statements included in our Annual Report on Form 10-K
for the year ended June 30, 2009 filed with the Securities and Exchange
Commission on September 28, 2009.
|
Report
of the Compensation Committee
|
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis contained in this Proxy Statement with management. Based on the
Compensation Committee’s review of and the discussions with management with
respect to the Compensation Discussion and Analysis, the Compensation Committee
recommended to the board of directors that the Compensation Discussion and
Analysis be included in this Proxy Statement.
|
|
|
|
|
|
|
Respectfully
Submitted,
|
|
|
|
|
|
|
|
|
|
David
M. Connell, Chairman
|
|
|
|
|
Susan
Harris
|
|
|
|
|
James
B. Roszak
|
|
|
Summary
Compensation Table
The
following table contains summary compensation information of the following
executive officers, or our “Named Executive Officers,” for fiscal years 2009,
2008, the six months ended June 30, 2007 and the year ended
December 31, 2006.
Summary
Compensation Table
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
All
Other
|
|
|
|
|
Name
and Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
(4)
|
|
|
Compensation
|
|
|
Total
|
|
Ronald
F. Valenta
Chief
Executive Officer (6)
|
|
|
2008
|
|
|
$
|
77,778
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,000
|
|
|
$
|
102,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
E. Barrantes
Chief
Financial Officer and
Executive
Vice President (1)(5)
|
|
|
2009
|
|
|
$
|
200,000
|
|
|
$
|
42,000
|
|
|
$
|
137,600
|
|
|
$
|
5,250
|
|
|
$
|
384,850
|
|
|
|
|
2008
|
|
|
|
200,000
|
|
|
|
90,000
|
|
|
|
137,600
|
|
|
|
10,533
|
|
|
|
438,133
|
|
|
|
|
2007
|
|
|
|
100,000
|
|
|
|
—
|
|
|
|
68,800
|
|
|
|
3,512
|
|
|
|
172,312
|
|
|
|
|
2006
|
|
|
|
62,121
|
|
|
|
21,742
|
|
|
|
42,000
|
|
|
|
3,361
|
|
|
|
129,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
A. Wilson
General
Counsel, Vice President and
Counsel
(2)(5)
|
|
|
2009
|
|
|
$
|
200,000
|
|
|
$
|
42,000
|
|
|
$
|
168,600
|
|
|
$
|
9,598
|
|
|
$
|
420,198
|
|
|
|
|
2008
|
|
|
|
109,167
|
|
|
|
108,133
|
|
|
|
92,100
|
|
|
|
11,335
|
|
|
|
321,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Allan
Chief
Executive Officer, Royal Wolf (3)
|
|
|
2009
|
|
|
$
|
261,813
|
|
|
$
|
21,468
|
|
|
$
|
128,500
|
|
|
$
|
—
|
|
|
$
|
411,781
|
|
|
|
|
2008
|
|
|
|
313,764
|
|
|
|
107,575
|
|
|
|
71,600
|
|
|
|
—
|
|
|
|
492,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Theodore
Mourouzis
President,
Pac-Van, Inc. (7)(8)
|
|
|
2009
|
|
|
$
|
163,221
|
|
|
$
|
50,042
|
|
|
$
|
42,700
|
|
|
$
|
3,450
|
|
|
$
|
259,413
|
|
(1)
|
|
The
employment of Mr. Barrantes commenced in
September 2006.
|
|
|
|
(2)
|
|
The
employment of Mr. Wilson commenced in December 2007. Fiscal year
2008 included a signing bonus of $70,833.
|
|
|
|
(3)
|
|
Mr. Allan
became a Named Executive Officer in conjunction with our acquisition of
Royal Wolf effective September 13, 2007. The salary reflected in this
table was for the full fiscal year 2008. Australian dollar to U.S. dollar
exchange rates used were 0.7480 in fiscal year 2009 and 0.8965 in fiscal
year 2008.
|
|
|
|
(4)
|
|
The
amounts shown are the amounts of compensation expense recognized by us
relating to the grants of stock options, as described in Financial
Accounting Standards No. 123R. For a discussion of valuation
assumptions used in the calculation of these amounts for fiscal year 2008,
see Note 2, “ Summary of Significant Accounting Policies,” and Note 9,
“Stock Option Plans,” of the Notes to Consolidated Financial Statements
included in our Annual Report on Form 10-K for the year ended
June 30, 2009 filed with the Securities and Exchange Commission on
September 28, 2009.
|
|
|
|
(5)
|
|
Other
compensation represents reimbursement of medical and dental insurance
premiums.
|
|
|
|
(6)
|
|
The
employment of Mr. Valenta commenced in February 2009. Other compensation
represents a one-time expense allowance.
|
|
|
|
(7)
|
|
Mr.
Mourouzis became a Named Executive Officer in conjunction with our
acquisition of Pac-Van, Inc. effective October 1, 2008. Included in the
bonus paid in fiscal year 2009 was $45,042, which pertained to periods
prior to our acquisition of Pac-Van.
|
|
|
|
(8)
|
|
Other
compensation represents 401(k) plan contributions by Pac-Van,
Inc.
|
Plan-Based
Awards
We have
only one compensation plan, our 2006 Stock Option Plan. The following table
provides information concerning each grant of an award made to the Named
Executive Officers in fiscal year 2009.
Option
Grants in Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
of
|
|
|
Option
Awards:
|
|
|
Exercise
or
|
|
|
|
|
|
|
|
|
|
|
|
Approval
of
|
|
|
Number
of
|
|
|
Base
Price of
|
|
|
Grant
Date
|
|
|
|
|
|
|
|
|
Grants
by the
|
|
|
Securities
|
|
|
Option
|
|
|
Fair
Value of
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Underlying
|
|
|
Awards
|
|
|
Option
|
|
|
Name
|
|
Grant
Date
|
|
|
Committee
|
|
|
Options
(#)
|
|
|
($/Shares)
|
|
|
Awards
($)
|
|
|
Theodore
Mourouzis
|
|
|
10/1/2008
|
|
|
|
9/17/2008
|
|
|
|
125,000
|
(1)
|
|
$
|
6.40
|
|
|
$
|
256,300
|
|
|
|
|
|
(1)
|
|
50,000
of these stock options vest in five equal annual installments beginning
October 1, 2009 and 75,000 of these stock options vest in varying periods
over 71 months subject to performance conditions based on Pac-Van,
Inc. achieving certain EBITDA (earnings before interest, income taxes,
depreciation and amortization and other non-operating costs) targets for
the fiscal years 2009 through
2013.
|
The
following table provides information concerning outstanding options as of
June 30, 2009.
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
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Equity
Incentive Plan
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Underlying
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Underlying
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Awards:
Number of
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Unexercised
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Unexercised
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Securities
Underlying
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Options
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Options
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Unexercised
Unearned
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(#)
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(#)
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Options
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Exercise
Price
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Expiration
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Name
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Exercisable
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Unexercisable
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(#)
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($/Sh)
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Date
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Charles
E. Barrantes
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90,000
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135,000
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(1)
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—
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$
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7.30
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9/11/16
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Christopher
A. Wilson
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45,000
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180,000
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(2)
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—
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$
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9.05
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12/14/17
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Robert
Allan
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9,000
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116,000
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(3)
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—
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$
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8.80
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1/22/18
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Theodore
Mourouzis
|
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—
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125,000
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(4)
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—
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$
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6.40
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10/1/18
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(1)
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|
These
options vest in five equal annual installments on September 11 of
each of 2007, 2008, 2009, 2010 and 2011, subject to continued service with
us, and have a ten-year term.
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|
|
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(2)
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|
These
options vest in five equal annual installments on December 14 of each
of 2008, 2009, 2010, 2011 and 2012, subject to continued service with us,
and have a ten-year term.
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|
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(3)
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45,000
of these stock options vest in five equal annual installments on
January 22 of each of 2009, 2010, 2011, 2012 and 2013. 80,000 of
these stock options vest over 20 months subject to a performance
condition based on Royal Wolf achieving a certain EBITDA target for the
fiscal year 2008. In June 2008, the Compensation Committee determined
that 40,000 of these performance-based options would be deemed to have
achieved the performance criteria and the remaining 40,000
performance-based options would be rolled over and modified during the
first quarter of the fiscal year ending June 30, 2010, over a longer
period. These stock options are subject to continued service with us and
have a ten-year term.
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(4)
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|
50,000
of these options vest in five equal installments beginning October 1, 2009
and 75,000 of these options vest in varying periods over 71 months subject
to performance conditions based on Pac-Van, Inc. achieving certain EBITDA
targets for the fiscal years 2009 through 2013. These stock options are
subject to continued service with us and hold a ten-year
term.
|
No Named
Executive Officer exercised any stock options during fiscal year
2009.
Employment
Agreements
On
February 11, 2009, we entered into an employment agreement with Ronald Valenta,
under which he agreed to serve to serve as our Chief Executive Officer. Under
the employment agreement, Mr. Valenta receives a base annual salary of $200,000
and is eligible to receive an annual bonus each fiscal year of up to 35%
of his base salary, provided he is employed on the last day of such
year. We reimburse Mr. Valenta up to $2,500 per month for a car allowance and
health, dental, vision and supplemental disability premiums for Mr. Valenta
and his family. Mr. Valenta is entitled to a severance payment equal to one
year’s salary if his employment is terminated without cause, as defined in the
employment agreement.
On
September 11, 2006, we entered into an employment agreement with Charles E.
Barrantes, under which he agreed to serve as our Executive Vice President and
Chief Financial Officer. Under the employment agreement, Mr. Barrantes
receives a base annual salary of $200,000 and is eligible to receive an annual
bonus each fiscal year of up to 35% of his base salary, provided he is employed
on the last day of such year. We reimburse Mr. Barrantes up to $750 per
month for health, dental, vision and supplemental disability premiums for
himself and his family. Mr. Barrantes is entitled to participate on the
same basis in all offered benefits or programs as any other employee. On June
30, 2009, we entered into an amended and restated employment agreement with Mr.
Barrantes that provides that Mr. Barrantes is entitled to a severance payment
equal to one year’s salary if his employment is terminated without cause, as
defined in the employment agreement.
On
December 14, 2007, we entered into an employment agreement with Christopher
A. Wilson, under which he agreed to serve as our General Counsel, Vice President
and Secretary. Under the employment agreement, Mr. Wilson receives a base
annual salary of $200,000, and is eligible to receive an annual bonus each
fiscal year of up to 35% of his base salary, provided he is employed on the last
day of such year. Mr. Wilson is entitled to a severance payment equal to
one year’s salary if his employment is terminated without cause, as defined in
the employment agreement. We reimburse Mr. Wilson for up to $1,150 per
month for health, dental, vision and supplemental disability premiums for
himself and his family. Mr. Wilson is entitled to participate on the same
basis in all offered benefits or programs as any other employee.
Mr.
Valenta, at his recommendation, has not been granted stock options.
Mr. Barrantes and Mr. Wilson each received options to purchase an
aggregate of 225,000 shares of common stock under our 2006 Stock Option Plan as
of the respective dates of commencement of their employment. Mr. Barrantes’
and Mr. Wilson’s stock options have an exercise price of $7.30 and $9.05
per share, respectively (the closing sales price of the common stock on the date
of grant), vest in five equal annual installments and expire ten years from the
date of grant.
The
employment agreements of Mr. Valenta, Mr. Barrantes and Mr. Wilson
will terminate upon the date of their death or in the event of a physical or
mental disability that renders either of them unable to perform his duties for
60 consecutive days or 120 days in any twelve-month period. Mr. Valenta,
Mr. Barrantes and Mr. Wilson may terminate their respective employment
agreements at any time upon 30 days notice to us, and we may terminate
these agreements at any time upon notice to Mr. Valenta, Mr. Barrantes or
Mr. Wilson.
Royal
Wolf employs Robert Allan pursuant to an employment agreement that will continue
indefinitely, unless terminated by Mr. Allan or Royal Wolf upon at least
six months’ notice. Under his employment agreement, using an Australian dollar
to United States dollar exchange rate of 0.8048 at June 30, 2009,
Mr. Allan receives a base annual salary of $281,683 and is eligible to
receive an annual performance bonus not to exceed $115,489 based upon the
achievement of specified performance indicators. The maximum annual performance
bonus is subject to increase based upon consumer priced index increases. There
is no severance or similar obligation to Mr. Allan under his employment
agreement except that Royal Wolf may pay six months’ compensation to
Mr. Allan in lieu of providing notice of termination of his employment as
described above.
Ronald
Valenta, Charles Barrantes and Christopher Wilson are the only employees who
received compensation for services to the Company in fiscal year 2009. Robert
Allan received compensation as Chief Executive Officer of GFN Australasia
Holdings Pty Limited, which, with its subsidiaries, we refer to as “Royal Wolf,”
an indirectly-owned Australian subsidiary.
In
approving Mr. Valenta's, Mr. Barrantes’ and Mr. Wilson’s compensation,
the Board of Directors reviewed information provided by management regarding the
compensation of comparable level officers of public companies, including
companies in the equipment leasing business. The Board also considered the size
and stage of development of the Company, Mr. Valenta's, Mr. Barrantes’ and
Mr. Wilson’s experience and prior compensation, and the scope of the
services that each would be required to render (particularly given the lack of
support staff and the need to implement policies and procedures). The Board of
Directors determined that Mr. Valenta's, Mr. Barrantes’ and
Mr. Wilson’s compensation should consist of a base salary, the opportunity
for a material performance-based bonus and stock options under the 2006 Stock
Option Plan.
Potential
Payments Upon Termination of Employment or Change in Control
We have
no agreements or arrangement with any executive officer that provides for
payments upon termination of employment except that to the employment agreements
of Mr. Valenta, Mr. Barrantes and Mr. Wilson under which each is entitled
to a lump sum severance payment of twelve months base salary if we terminate
their employment without “cause” or he terminates his employment for “good
reason”. We have no other agreements or arrangements with any executive officer
that provide for payments upon a change of control.
TRANSACTIONS
WITH RELATED PERSONS
On
October 1, 2008 we acquired Mobile Office Acquisition Corp., or MOAC,
through a merger, or Merger. Pursuant to the Merger Agreement, the former
stockholders of MOAC received approximately $19.4 million in cash, four
million shares of restricted common stock of GFN (valued pursuant to the Merger
Agreement at $7.50 per share with an aggregate value of $30 million) and a
20-month subordinated promissory note in the principal amount of
$1.5 million issued by GFN North America Corp., our wholly-owned
subsidiary. A special committee of independent directors of the Company was
formed to determine whether to acquire MOAC because Ronald F. Valenta, our
President, Chief Executive Officer and director, is a stockholder of MOAC. The
stockholders of the Company approved the acquisition of MOAC on
September 30, 2008, and the acquisition was completed on October 1,
2008.
In
April 2006, immediately prior to the closing of our initial public
offering, Ronald F. Valenta, our Chief Executive Officer and a director,
purchased from the Company 466,667 warrants at a price of $1.20 per warrant for
an aggregate purchase price of approximately $560,000. These warrants are
identical to the warrants issued in our initial public offering in that each
warrant entitles the holder to purchase one share of Common Stock for $6.00 per
share following the completion of a business combination and expires
April 5, 2010.
In
May 2008, pursuant to an offering to holders of our publicly-traded
warrants at a reduced exercise price of $5.10 per warrant, Mr. Valenta
exercised all 466,667 of his warrants.
The
Company had an unsecured limited recourse revolving line of credit from Ronald
F. Valenta, a director and the chief executive officer of the Company, pursuant
to which the Company could borrow up to $3,000,000 outstanding at one time. The
line of credit terminated upon the completion of the acquisition of Royal Wolf,
and the outstanding principal and interest totaling $2,586,848 was repaid on
September 14, 2007.
The
Company utilizes certain accounting, administrative and secretarial services
from affiliates of officers; as well as office space provided by an affiliate of
Mr. Valenta. Until the consummation of a business combination by the Company,
the affiliates had agreed to make such services available to the Company free of
charge, as may be required by the Company from time to time; with the exception
of the reimbursement of certain out-of-pocket costs incurred on behalf of the
Company. Effective September 14, 2007, the Company entered into a
month-to-month arrangement that lasted until January 31, 2008 with an
affiliate of Mr. Valenta for the rental of the office space at $1,148 per
month. In addition, effective September 14, 2007, the Company commenced
recording a charge to operating results (with an offsetting contribution to
additional paid-in capital) for the estimated cost of contributed services
rendered to the Company at no compensation by non-employee officers and
administrative personnel of affiliates. These contributed services ceased in
February 2009.
Effective
October 1, 2008, the Company entered into a services agreement through June 30,
2009 (the "Termination Date") with an affiliate of Mr. Valenta for certain
accounting, administrative and secretarial services to be provided at the
corporate offices and for certain operational, technical, sales and marketing
services to be provided directly to the Company's operating subsidiaries.
Charges for services rendered at the corporate offices will be, until further
notice, at $7,000 per month and charges for services rendered to the Company's
subsidiaries will vary depending on the scope of services provided. The services
agreement provides for, among other things, mutual modifications to the scope of
services and rates charged and automatically renews for successive one-year
terms, unless terminated in writing by either party not less than 30 days prior
to the Termination Date. Total charges to the Company for services rendered
under this agreement totaled $63,000 at the corporate office and $155,000, plus
out-of-pocket expenses of $16,000, at the operating subsidiaries in
2009.
Effective
January 31, 2008, the Company entered into a lease with an affiliate of
Mr. Valenta for its new corporate headquarters in Pasadena, California. The
rent is $7,393 per month, effective March 1, 2009, plus allocated charges for
common area maintenance, real property taxes and insurance, for approximately
3,000 square feet of office space. The term of the lease is five years, with two
five-year renewal options, and the rent is adjusted yearly based on the consumer
price index. Rental payments were $113,000 in fiscal year 2009.
We have
not adopted a formal written policy regarding transactions with related persons.
However, in general, any such material transaction would require approval of the
Board of Directors, with any interested director abstaining.
CONFLICTS
OF INTEREST
Stockholders
should be aware of the following potential conflicts of interest:
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|
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•
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|
Our
chief executive officer is not required to commit his full time to our
affairs and, accordingly, he may have conflicts of interest in allocating
his time among various business activities.
|
|
|
|
|
|
•
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|
In
the course of their other business activities, our officers and directors
may become aware of investment and business opportunities that may be
appropriate for presentation to the Company and the other entities with
which they are affiliated. Our management may have conflicts of interest
in determining to which entity a particular business opportunity should be
presented.
|
|
|
|
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|
•
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|
Our
officers and directors may in the future become affiliated with entities,
including other blank check companies, engaged in business activities
similar to those in which our company intends to
engage.
|
In
general, officers and directors of a corporation incorporated under the laws of
the State of Delaware are required to present business opportunities to a
corporation if:
|
|
|
|
|
•
|
|
the
corporation could financially undertake the
opportunity;
|
|
|
|
|
|
•
|
|
the
opportunity is within the corporation’s line of business;
and
|
|
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|
|
|
•
|
|
it
would not be fair to the corporation and its stockholders for the
opportunity not to be brought to the attention of the
corporation.
|
Accordingly,
as a result of multiple business affiliations, our officers and directors may
have similar legal obligations relating to presenting business opportunities
meeting the above-listed criteria to multiple entities. In addition, conflicts
of interest may arise when our board evaluates a particular business opportunity
with respect to the above-listed criteria. We cannot assure you that any of the
above mentioned conflicts will be resolved in our favor.
STOCKHOLDER
COMMUNICATIONS WITH DIRECTORS
Stockholders
who want to communicate with the Board of Directors or any individual director
should write to: Corporate Secretary, General Finance Corporation, 39 East Union
Street, Pasadena, California 91103. The letter should indicate that you are
a stockholder of General Finance Corporation and set forth the number of shares
you hold and how the shares are held if they are not registered in your name.
Depending upon the subject matter, the Corporate Secretary will:
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•
|
|
Forward
the communication to the director or directors to whom it is
addressed;
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|
•
|
|
Delegate
the inquiry to management where it is a request for information about the
Company or a stock-related matter; or
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•
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|
Not
forward the communication, if it is primarily commercial in nature, or if
it relates to an improper or irrelevant topic, or is repetitive or
redundant.
|
STOCKHOLDER
PROPOSALS
We
anticipate holding our 2010 Annual Meeting in December 2010. If you wish to
submit proposals to be included in our proxy statement for the 2010 Annual
Meeting of Stockholders, we must receive such proposals 90 days prior to
the meeting. Please address your proposals to: Corporate Secretary, General
Finance Corporation, 39 East Union Street, Pasadena,
California 91103.
OTHER
MATTERS
Management
does not know of any matters to be presented to the Annual Meeting other than
those set forth above. However, if other matters properly come before the Annual
Meeting, it is the intention of the persons named in the accompanying proxy to
vote said proxy in accordance with the recommendation of the Board of Directors
and authority to do so is included in the proxy.
AVAILABILITY
OF ANNUAL REPORT ON FORM 10-K
We
will furnish without charge a copy of our Annual Report on Form 10-K for the
fiscal year ended June 30, 2009, as filed with the Securities and Exchange
Commission, including the financial statements and financial statement schedule
thereto, to any stockholder who so requests by writing to: Corporate Secretary,
General Finance Corporation, 39 East Union Street, Pasadena, California
91103.
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By
Order of the Board of Directors
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Christopher
A. Wilson
General Counsel, Vice
President and Secretary
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Dated:
October 19, 2009
Appendix
A
GENERAL
FINANCE CORPORATION
2009
STOCK INCENTIVE PLAN
————————————————————
Plan
Document
————————————————————
1. Establishment,
Purpose, and Types of Awards. General Finance Corporation
(the “Company”)
hereby establishes this equity-based incentive compensation plan to be known as
the “General Finance Corporation 2009 Stock Incentive Plan” (hereinafter
referred to as the “Plan”), for the
following purposes: (a) to enhance the Company’s ability to attract highly
qualified personnel; (b) to strengthen its retention capabilities; (c) to
enhance the long-term performance and competitiveness of the Company; and (d) to
align the interests of Participants with those of stockholders.
(a) Effective
Date. This Plan shall become effective on the date upon which
it has received approval by a vote of a majority of the votes cast at a duly
held meeting of the Company’s stockholders (or by such other stockholder vote
that the Committee determines to be sufficient for the issuance of Shares and
Awards according to the Company’s governing documents and Applicable
Law).
(b) Awards. The Plan
permits the granting of the following types of Awards according to the Sections
of the Plan listed here:
Section
5
|
Stock
Options
|
Section
6
|
Share
Appreciation Rights (SARs)
|
Section
7
|
Restricted
Shares, Restricted Share Units (RSUs), and Unrestricted
Shares
|
Section
8
|
Deferred
Share Units (DSUs)
|
Section
9
|
Performance
and Cash-settled Awards
|
(c) Appendices. Incorporated
by reference and thereby part of the Plan are the terms set forth in the
following appendices:
Appendix
I
|
Definitions
|
Appendix
II
|
Special
U.S. provisions regarding tax and securities compliance
|
(d) Effect on Other Plans, Awards, and
Arrangements. This Plan is not intended to affect and shall
not affect any stock options, equity-based compensation, or other benefits that
the Company or its Affiliates may have provided, or may separately provide in
the future, pursuant to any agreement, plan, or program that is independent of
this Plan. Notwithstanding the foregoing, effective upon stockholder approval of
this Plan, no further awards of any kind shall occur under the 2006 Stock Option
Plan, and any shares that are currently reserved for awards under such plan (as
well as any Shares that in the future become available for awards under that
plan) shall be added to the reserve of Shares that are authorized and available
for issuance pursuant to this Plan.
2. Defined
Terms. Terms in the Plan
and any Appendix that begin with an initial capital letter have the defined
meaning set forth in Appendix
I, unless the Committee concludes in good faith that the context of a
particular use indicates a different meaning that the Committee applies in a
uniform and consistent prospective manner.
3. Shares
Subject to the Plan. Subject to
Section 13 below, there shall be available for issuance under the Plan an
aggregate of 1,138,000 Shares of Company Stock. The Shares
deliverable pursuant to Awards shall be authorized, but unissued Shares, or
Shares that the Company otherwise holds in treasury or in trust. In
addition, any Shares that for any reason will never be issued to a Participant
or Beneficiary pursuant to an Award (for example, due to settlement of the Award
in cash rather than in Shares, or the Award’s forfeiture, cancellation,
expiration, or net settlement) will again be available for future
Awards. Further, and to the extent permitted under Applicable Laws,
the maximum number of Shares available for delivery under the Plan shall not be
reduced by any Shares issued under the Plan through the settlement, assumption,
or substitution of outstanding awards or obligations to grant future awards as a
condition of the Company’s or an Affiliate’s acquiring another
entity. For purposes of clarity, Shares that are tendered or withheld
in payment of all or part of the exercise price of an Award or in satisfaction
of the Withholding Taxes, and Shares that are reacquired with cash tendered in
payment of the exercise price of an Award, shall not be included in or added to
the number of Shares available for issuance under the Plan.
(a) General
Rule. Awards may only be made to Eligible Persons (as
determined for each Award on its Grant Date). Unless specifically
stated in an Award Agreement, the grant of an Award shall not obligate the
Company or any Affiliate to continue the employment or service of any Eligible
Person, or to provide any future Awards or other remuneration at any time
thereafter.
(b) Limits on Individual
Awards. During the term of the Plan, no Participant may
receive Options and SARs that relate to more than 250,000 Shares, subject to
adjustment pursuant to Section 13 below.
(c) Replacement
Awards. Subject to Applicable Laws (including any associated
stockholder approval requirements), the Committee may, in its sole discretion
and upon such terms as it deems appropriate, require as a condition for granting
an Award that an Eligible Person surrender for cancellation some or all Awards
that have previously been granted under this Plan or otherwise. An
Award conditioned upon such surrender may or may not be the same type of Award,
may cover the same (or a lesser or greater) number of Shares as such surrendered
Award, may have other terms that are determined without regard to the terms or
conditions of such surrendered Award, and may contain any other terms that the
Committee deems appropriate.
(a) Grants. The
Committee may grant Options to Eligible Persons pursuant to Award Agreements
setting forth terms and conditions that are not inconsistent with the Plan;
subject to Appendix II for Awards intended to qualify as tax-favored ISOs as
defined therein. The Committee shall determine and set forth in an Award
Agreement all of the terms and conditions on which Options
are granted, including any vesting or other requirements for the right to
exercise the Option; provided that –
(i)
|
the
exercise price for Shares subject to purchase through exercise of an
Option shall not be less than 100% of the Fair Market Value of underlying
Shares on the Grant Date, and
|
(ii)
|
no
Option shall be exercisable for a term ending more than ten years after
its Grant Date.
|
(b) Method of
Exercise. Options may be exercised by the Participant (or the
Participant's guardian or personal representative) giving notice to the
secretary of the Company pursuant to procedures established by the Company for
the exercise of Options. Such a notice shall state the number of
Shares the Participant has elected to purchase under the Option, and the method
by which the exercise price and any applicable Withholding Taxes will be
paid. The exercise price and Withholding Taxes may be paid in cash or
check payable to the Company (in U.S. dollars); or to the extent that the terms
of an Award Agreement expressly permit –
(i)
|
by
delivery or attestation of Shares (valued at their Fair Market Value) that
are either subject to the Option being exercised or that the Participant
has owned for at least six months (or such other period as the Committee
shall specify in the Award Agreement or thereafter in writing) in
satisfaction of all or any part of the exercise price or Withholding
Taxes,
|
(ii)
|
delivery
of a properly executed exercise notice with irrevocable instructions to a
broker to deliver to the Company the amount necessary to pay the exercise
price or Withholding Taxes from the sale or proceeds of a loan from the
broker with respect to the sale of Shares or a broker loan secured by
Shares, or
|
(iii)
|
a
combination of (i) and (ii).
|
(c) Exercise of an Unvested
Option. The Committee in its sole discretion may allow a
Participant to exercise an unvested Option, in which case the Shares then issued
shall be Restricted Shares having analogous vesting restrictions to the unvested
Option.
(d) Termination of Continuous
Service. The Committee may establish and set forth in the
applicable Award Agreement the terms and conditions on which an Option shall
remain exercisable following termination of a Participant’s Continuous
Service. Except to the extent an Award Agreement specifically
provides otherwise, an Option shall be exercisable, only to the extent the
Participant was entitled to exercise such Option at the date of terminating
Continuous Service, only until the “Option Termination Date” determined pursuant
to the following table:
Reason
for terminating Continuous Service
|
Option
Termination Date
|
(I)
By the Company for Cause, or what would have been Cause if the Company had
known all of the relevant facts.
|
Termination
of the Participant’s Continuous Service, or when Cause first existed if
earlier.
|
(II)
Disability of the Participant.
|
Within
one year after termination of the Participant’s Continuous
Service.
|
(III)
Retirement of the Participant with 5 years or more of Continuous
Service.
|
Within
one year
after termination of the Participant’s Continuous
Service.
|
(IV)
Death of the Participant during Continuous Service or within 90 days
thereafter.
|
Within
one year
after termination of the Participant’s Continuous
Service.
|
(V)
Other than due to Cause or the Participant’s Disability, Retirement, or
Death.
|
Within
90 days after termination of the Participant’s Continuous
Service.
|
Notwithstanding the foregoing, in no
event may any Option be exercised after the expiration of the Option term as set
forth in the Award Agreement. To the extent that a Participant is not
entitled to exercise an Option at the date of his or her termination of
Continuous Service, or if the Participant (or other person entitled to exercise
the Option) does not exercise the Option to the extent so entitled within the
time specified in the Award Agreement or above (as applicable), the Option shall
terminate and the Shares underlying the unexercised portion of the Option shall
revert to the Plan and become available for future Awards.
(e) Buyout. The
Committee may at any time offer to buy out an Option, in exchange for a payment
in cash or Shares, based on such terms and conditions as the Committee shall
establish and communicate to the Participant at the time that such offer is
made. In addition, but subject to any stockholder approval
requirement of Applicable Law, if the Fair Market Value for Shares subject to an
Option is more than 33% below their exercise price for more than 30 consecutive
business days, the Committee may unilaterally terminate and cancel the Option by
providing each affected Participant with either cash or a new Award that has (i)
a value equal to that of the vested portion of the Option being cancelled (with
value being uniformly determined as of the buyout date in accordance with the
methodology that the Company generally uses for financial accounting purposes
for its Awards), (ii) vesting terms not less favorable to the Participant than
the Option being cancelled, and (iii) any other terms and conditions that the
Committee may set forth in the Award Agreement for the new Award.
(a) Grants. The
Committee may grant SARs to Eligible Persons pursuant to Award Agreements
setting forth terms and conditions that are not inconsistent with the Plan;
provided that –
(i)
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the
exercise price for the Shares subject to each SAR shall not be less than
100% of the Fair Market Value of underlying Shares on the Grant
Date;
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(ii)
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no
SAR shall be exercisable for a term ending more than ten years after its
Grant Date; and
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(iii)
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each
SAR shall be subject to the provisions of Section 5(d) relating to the
effect of a termination of Participant’s Continuous Service and Section
5(e) relating to buyouts, in each case with “SAR” being substituted for
“Option.”
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(b) Settlement. An SAR
shall entitle the Participant, upon exercise of the SAR, to receive Shares
having a Fair Market Value on the date of exercise equal to the excess of (x)
the Fair Market Value, on such date, of the Shares covered by the exercised SAR,
over (y) an exercise price designated in the SAR Award Agreement but not less
than 100% of the Fair Market Value of the Company Stock on the SAR’s Grant
Date. An SAR Award Agreement may limit the total settlement value
that the Participant will be entitled to receive upon the SAR’s exercise, and
may provide for settlement either in cash or in any combination of cash or
Shares that the Committee may authorize pursuant to an Award
Agreement.
(c) Term and
Conditions. Whether or not the Committee grants SARs
independently of or in tandem with any Option, the Award Agreement for an SAR
shall set forth any terms and conditions, not inconsistent with the Plan, that
the Committee may in its discretion determine.
(d) SARs related to
Options. The Committee may grant SARs either concurrently with
the grant of an Option or with respect to an outstanding Option, in which case
the SAR shall extend to all or a portion of the Shares covered by the related
Option. An SAR shall entitle the Participant who holds the related
Option, upon exercise of the SAR and surrender of the related Option, or portion
thereof, to the extent the SAR and related Option each were previously
unexercised, to receive payment of an amount determined pursuant to Section 6(b)
above.
(e) Effect on Available
Shares. Upon each exercise of an SAR that is settled in
Shares, only those Shares that are issued or delivered in settlement of the
exercise shall be counted against the number of Shares available for Awards
under the Plan; provided that the number of Shares that are issued or delivered
pursuant to the exercise of an SAR shall not exceed the number of Shares
specified in the Award Agreement as being subject to the SAR Award.
(f) Termination of Employment or
Consulting Relationship. The Committee
shall establish and set forth in the applicable Award Agreement the terms and
conditions on which a SAR shall remain exercisable, if at all, following
termination of a Participant’s Continuous Service, subject to Section
6(a)(iii).
7.
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Restricted Shares,
RSUs, and Unrestricted Share
Awards.
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(a) Grant. The
Committee may grant Restricted Share or RSU Awards to Eligible Persons, in all
cases pursuant to Award Agreements setting forth terms and conditions that are
not inconsistent with the Plan. The Committee shall establish as to
each Restricted Share or RSU
Award the
period or periods of time (the “Restriction Period”)
at the end of which all or some specified restrictions(which may include the
satisfaction of performance criteria as established by the Committee, the
passage of time or such other conditions as the Committee shall set), shall
lapse and the Participant shall receive unrestricted Shares in settlement of the
Award. The Committee may make Restricted Share and RSU Awards
with or without the requirement for payment of cash consideration. In
addition, the Committee may grant Awards hereunder in the form of Unrestricted
Shares which shall vest in full upon the Grant Date or such other date as the
Committee may determine or which the Committee may issue pursuant to any program
under which one or more Eligible Persons (selected by the Committee in its sole
discretion) elect to pay for such Shares or to receive Unrestricted Shares in
lieu of cash bonuses that would otherwise be paid.
(b) Vesting and
Forfeiture. The Committee shall set forth in an Award
Agreement granting Restricted Shares or RSUs, the terms and conditions under
which the Participant’s interest in the Restricted Shares or the Shares subject
to RSUs will become vested and non-forfeitable. Except as set forth
in the applicable Award Agreement or the Committee otherwise determines, upon
termination of a Participant’s Continuous Service for any reason, the
Participant shall forfeit his or her Restricted Shares and RSUs to the extent
the Participant’s interest therein has not vested on or before such termination
date; provided that if a Participant purchases Restricted Shares and forfeits
them for any reason, the Company shall return the purchase price to the
Participant only if and to the extent set forth in an Award Agreement or to the
extent required by Applicable Laws.
(c) Certificates for Restricted
Shares. Unless otherwise provided in an Award Agreement, the
Company shall hold certificates representing Restricted Shares and dividends
(whether in Shares or cash) that accrue with respect to them until the
restrictions lapse, and the Participant shall provide the Company with
appropriate stock powers endorsed in blank. The Participant’s failure to provide
such stock powers within ten days after a written request from the Company shall
entitle the Committee to unilaterally declare a forfeiture of all or some of the
Participant’s Restricted Shares.
(d) Issuance of Shares upon
Vesting. As soon as practicable after both the vesting of a
Participant’s Restricted Shares (or of the right to receive Shares underlying
RSUs) and the Participant’s satisfaction of applicable Withholding Taxes, the
Company shall deliver to the Participant, free from vesting restrictions, one
Share for each surrendered and vested Restricted Share (or deliver one Share
free of the vesting restriction for each vested RSU), unless an Award Agreement
provides otherwise. No fractional Shares shall be distributed, and
cash shall be paid in lieu thereof.
(e) Dividends Payable on
Vesting. Except to the extent otherwise provided in the Award
Agreement, whenever Shares are deliverable to a Participant or duly-authorized
transferee pursuant to Section 7(d) above as a result of the vesting of a
Restricted Share or RSU Award, the Participant or his or her duly authorized
transferee shall also be entitled to receive, with respect to each Share then
vesting, a number of Shares equal to the sum of –
(i)
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any
per-Share dividends which were declared and paid in Shares to the
Company’s stockholders of record between the Grant Date and the date
Shares are delivered to the Participant pursuant to the particular vesting
event for the Award, and
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(ii)
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the
Shares that the Participant could have purchased at their Fair Market
Value on the payment date of any cash dividends if the Participant had
received such cash dividends with respect to each Restricted Share, or
Share subject to an RSU, between the Grant Date and the date Shares are
delivered to the Participant pursuant to the particular vesting event for
the Award.
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(f) Deferral Elections for
RSUs. To the extent specifically provided in an Award
Agreement, a Participant may irrevocably elect, in accordance with Section 8
below, to defer the receipt of all or a percentage of the Shares that would
otherwise be transferred to the Participant upon the vesting of an RSU
Award. If the Participant makes this election: (i) the Company shall
credit the Shares subject to the election, and any associated dividends and
interest, to a DSU account established pursuant to Section 8 below on the date
such Shares and any associated cash would otherwise have been delivered to the
Participant pursuant to Section 7(d) and 7(e) above, and (ii) any vesting that
would have occurred (other than for death or Disability if provided pursuant to
the Award Agreement) within the 12-month period following the date of the
Participant’s election shall occur on the 12-month anniversary of such
election.
(a) Elections to
Defer. The Committee may permit any Eligible Person to
irrevocably elect, on a form provided by and acceptable to the Committee (the
“Election
Form”), to forego the receipt of cash or other compensation (including
the Shares deliverable pursuant to any RSU Award) and in lieu thereof to have
the Company credit to an internal Plan account a number of DSUs having a Fair
Market Value equal to the Shares and other compensation
deferred. These credits will be made at the end of each calendar
quarter (or other period determined by the Committee) during which compensation
is deferred. Unless the Company sends a Participant a written notice
rejecting an Election Form within five business days after the Company receives
it, an Election Form shall take effect on the first day of the next calendar
year (or on the first day of the next calendar month in the case of an initial
election within 30 days after a Participant becomes first eligible to defer
hereunder) after its delivery to the Company. Notwithstanding the
foregoing sentence, a Participant’s Election Form will be ineffective with
respect to any compensation that the Participant earns before the date on which
the Election Form takes effect.
(b) Vesting. Unless an
Award Agreement expressly provides otherwise, each Participant shall be 100%
vested at all times in any Shares subject to DSUs.
(c) Issuances of
Shares. The Company shall settle a Participant’s DSU Award, by
delivering one Share for each DSU, in five substantially equal annual
installments that are issued before the last day of each of the five calendar
years that end after the date on which the Participant’s Continuous Service ends
for any reason, subject to –
(i) the
Participant’s right to elect a different form of distribution, only on a form
provided by and acceptable to the Committee, that permits the Participant to
select any combination of a lump sum and annual installments that are triggered
by, and completed within ten years following, the last day of the Participant’s
Continuous Service, and
(ii) the
Company’s acceptance of the Participant’s distribution election form at the time
the Participant elects to defer the receipt of cash or other compensation
pursuant to Section 9(a), provided that the Participant may change a
distribution election through any subsequent election that (I) the Participant
delivers to the Company at least one year before the date on which distributions
are otherwise scheduled to commence pursuant to the Participant’s initial
distribution election, and (II) defers the commencement of distributions by at
least five years from the originally scheduled distribution commencement
date.
Fractional
shares shall not be issued, and instead shall be paid out in cash.
(d) Dividends. Unless
otherwise provided in an Award Agreement, whenever Shares are issued to a
Participant pursuant to Section 9(c) above, such Participant shall also be
entitled to receive, with respect to each Share issued, a number of Shares
determined in a manner consistent with Section 7(e) above.
(e) Emergency
Withdrawals. In the event the Committee determines that a
Participant suffers an unforeseeable emergency within the contemplation of this
Section, the Participant may apply to the Company for an immediate distribution
of all or a portion of the Participant’s DSUs. The unforeseeable
emergency must result from a sudden and unexpected illness or accident of the
Participant, the Participant’s spouse, or a dependent of the Participant,
casualty loss of the Participant’s property, or other similar extraordinary and
unforeseeable conditions beyond the control of the Participant. The
Committee shall, in its sole and absolute discretion, determine whether a
Participant has a qualifying unforeseeable emergency, and whether or not to
provide the Participant with cash or Shares. The amount of any
distribution hereunder shall be limited to the amount necessary to relieve the
Participant’s unforeseeable emergency plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution. The number of
Shares subject to the Participant’s DSU Award shall be reduced by any Shares
distributed to the Participant and by a number of Shares having a Fair Market
Value equal to any cash paid to the Participant pursuant to this
Section.
(f) Unsecured Rights to Deferred
Compensation. A Participant’s right to DSUs shall at all times
constitute an unsecured promise of the Company to pay benefits as they come
due. The right of the Participant or the Participant’s
duly-authorized transferee to receive benefits hereunder shall be solely an
unsecured claim against the general assets of the Company. Neither
the Participant nor the Participant’s duly-authorized transferee shall have any
claim against or rights in any specific assets, Shares or other funds of the
Company.
9.
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Performance and
Cash-Settled Awards.
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(a) Performance
Units. Subject to the limitations set forth in paragraph (b)
hereof, the Committee may in its discretion grant Performance Units to any
Eligible Person, including Performance Unit Awards that (i) have substantially
the same financial benefits and other terms and conditions as Option, SARs,
RSUs, or DSUs, but (ii) are settled only in cash. All Awards
hereunder shall be made pursuant to Award Agreements setting forth terms and
conditions that are not inconsistent with the Plan.
(b) Deferral Elections. At any
time prior to the date that is at least six months before the close of a
Performance Period (or shorter or longer period that the Committee selects) with
respect to an Award of either Performance Units or Performance Compensation, the
Committee may permit a Participant who is a member of a select group of
management or highly compensated employees to irrevocably elect, on a form
provided by and acceptable to the Committee, to defer the receipt of all or a
percentage of the cash or Shares that would otherwise be transferred to the
Participant upon the vesting of such Award. If the Participant makes
this election, the cash or Shares subject to the election, and any associated
interest and dividends, shall be credited to an account established pursuant to
Section 8 hereof on the date such cash or Shares would otherwise have been
released or issued to the Participant pursuant to Section 9(a)
above.
10. Taxes;
Withholding. Participants are
solely responsible and liable for the satisfaction of all taxes and penalties
that may arise in connection with Awards, and neither the Company, any
Affiliate, nor any of their employees, directors, or agents shall have any
obligation to mitigate, indemnify or to otherwise hold any Participant harmless
from any or all of such taxes. The Company’s obligation
to deliver Shares (or to pay cash) to Participants pursuant to Awards is at all
times subject to their prior or coincident satisfaction of all required
Withholding Taxes. Except to the extent otherwise either provided in
an Award Agreement or thereafter authorized by the Committee, the Company or any
Affiliate will satisfy required Withholding Taxes first from withholding the
cash otherwise payable to the Participant pursuant to the Award, and then by
withholding and cancelling the Participant’s rights with respect to a number of
Shares that (i) would otherwise have been delivered to the Participant pursuant
to the Award and (ii) have an aggregate Fair Market Value equal to the
Withholding Taxes (such withheld Shares to be valued on the basis of the
aggregate Fair Market Value thereof on the date of the
withholding). The number of Shares so withheld and cancelled will be
rounded up to the nearest whole Share sufficient to satisfy the Withholding
Taxes, with cash being paid to the Participant in an amount equal to the amount
by which the Fair Market Value of such Shares exceeds the Withholding
Taxes.
11. Non-Transferability of
Awards.
(a) General. Except as
set forth in this Section, or as otherwise approved by the Committee, Awards may
not be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent or
distribution. The designation of a death beneficiary by a Participant
will not constitute a transfer. An Award may be exercised, during the
lifetime of the holder of an Award, only by such holder, the duly-authorized
legal representative of a Participant who is Disabled, or a transferee permitted
by this Section 11.
(b) Death. In the event of the
death of a Participant, any outstanding Awards issued to the Participant shall
automatically be transferred to the Participant’s Beneficiary (or, if no
Beneficiary is designated or surviving, to the person or persons to whom the
Participant’s rights under the Award pass by will or the laws of descent and
distribution).
12. Modification
of Awards and Substitution of Options. Within the limitations of
the Plan, the Committee may modify an Award to accelerate the rate at which an
Option or SAR may be exercised, to accelerate the vesting of any Award, to
extend or renew outstanding Awards or to accept the cancellation of outstanding
Awards to the extent not previously exercised. Notwithstanding the
foregoing provision, no modification of an outstanding Award shall materially
and adversely affect a Participant’s rights thereunder unless either (i) the
Participant provides written consent or (ii) before a Change in Control, the
Committee determines in good faith that the modification is not materially
adverse to the Participant.
13.
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Change in Capital
Structure; Change in Control;
Etc.
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(a) Changes in
Capitalization. In the event of a Share dividend, Share split,
or combination of Shares, Share exchange, recapitalization or merger in which
the Company is the surviving corporation, spin-off or split-off of an Affiliate,
or other change in the Company capital stock (including, but not limited to, the
creation or issuance to stockholders generally of rights, options or warrants
for the purchase of common stock or preferred stock of the Company), the number
and kind of Shares of stock or securities of the Company to be subject to the
Plan and to Awards then outstanding or to be granted, any and all maximum limits
on the number of Shares that may be delivered under the Plan, any exercise price
for Awards, and other relevant provisions shall be equitably adjusted by the
Committee.
(b) Change in
Control. In the event of a Change in Control, but subject to
the terms of any Award Agreements, the Committee may in its sole and absolute
discretion and authority, without obtaining the approval or consent of the
Company’s stockholders or any Participant with respect to his or her outstanding
Awards, take one or more of the following actions (with respect to any or all of
the Awards, and with discretion to differentiate between individual Participants
and Awards for any reason):
(i) arrange
for or otherwise provide that each outstanding Award shall be assumed or a
substantially similar award shall be substituted by a successor corporation or a
parent or subsidiary of such successor corporation;
(ii) accelerate
the vesting of Awards so that Awards shall vest (and, to the extent applicable,
become exercisable) as to the Shares that otherwise would have been unvested and
provide that repurchase rights of the Company with respect to Shares issued
pursuant to an Award shall lapse as to the Shares subject to such repurchase
right;
(iii) arrange
or otherwise provide for the payment of cash or other consideration to
Participants in exchange for the satisfaction and cancellation of outstanding
Awards (with the Committee determining the amount payable to each Participant
based on the Fair Market Value, on the date of the Change in Control, of the
Award being cancelled, based on any reasonable valuation method selected by the
Committee); or
(iv) terminate
all or some Awards upon the consummation of the transaction, provided that the
Committee shall provide for vesting of such Awards in full as of a date
immediately prior to consummation of the Change in Control. To the
extent that an Award is not exercised prior to consummation of a transaction in
which the Award is not being assumed or substituted, such Award shall terminate
upon such consummation.
(c) Dissolution or
Liquidation. In the event of the dissolution or liquidation of
the Company other than as part of a Change in Control, each Award will terminate
immediately prior to the consummation of such action, subject to the ability of
the Committee to exercise any discretion authorized in the case of a Change in
Control.
14.
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Laws And
Regulations.
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(a) General
Rules. This Plan, the grant of Awards, the exercise of Options
and SARs, and the obligation of the Company to deliver, sell or accept the
surrender of any of its Shares or other securities shall be subject to all
Applicable Laws. In the event that any Shares are not registered
under any Applicable Law prior to the required delivery of them pursuant to
Awards, the Company may require, as a condition to their issuance or delivery,
that the persons to whom the Shares are to be issued or delivered make any
written representations and warranties (such as, but not limited to, that such
Shares are being acquired by the Participant for investment for the
Participant’s own account and not with a view to, for resale in connection with,
or with an intent of participating directly or indirectly in, any distribution
of such Shares) that the Committee may reasonably require, and the Committee may
in its sole discretion include a legend to such effect on the certificates
representing any Shares issued or delivered pursuant to the Plan.
(b) Black-out
Periods. Notwithstanding any contrary terms within the Plan or
any Award Agreement, the Committee shall have the absolute discretion to impose
a “blackout” period on the exercise of any Option or SAR, as well as the
settlement of any Award, with respect to any or all Participants (including
those whose Continuous Service has ended) to the extent that the Committee
determines that doing so is either desirable or required in order to comply with
applicable securities laws, provided that, if any blackout period occurs, the
term of any Option or SAR shall not expire until the earlier of (i) 30 days
after the blackout period ends or (ii) the Option’s or SAR’s expiration date but
only if within 30 days thereafter the Company makes a cash payment to each
affected Participant in an amount equal to the value of the Option or SAR (as
determined by the Committee) immediately before its expiration to the extent
then vested and exercisable.
(c) Local Law Adjustments and
Sub-plans. To facilitate the making of any grant of an Award
under this Plan, the Committee may provide for such special terms for Awards to
Participants who are located within the United States, foreign nationals, or who
are employed by the Company or any Affiliate outside of the United States of
America as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. The Company may adopt
rules and procedures relating to the operation and administration of this Plan
to accommodate the specific requirements of local laws and procedures of
particular countries.
Without
limiting the foregoing, the Company is specifically authorized to adopt rules
and procedures regarding the conversion of local currency, taxes, withholding
procedures and handling of stock certificates which vary with the customs and
requirements of particular countries. The Company may adopt sub-plans
and establish escrow accounts and trusts as may be appropriate or applicable to
particular locations and countries.
15. Termination, Rescission and
Recapture of Awards.
(a) Each
Award under the Plan is intended to align the Participant’s long-term interest
with those of the Company. If the Participant engages in certain
activities discussed below, either during employment or after employment with
the Company terminates for any reason, the Participant is acting contrary to the
long-term interests of the Company. Accordingly, but only to the
extent expressly provided in an Award Agreement, the Company may terminate any
outstanding, unexercised, unexpired, unpaid or deferred Awards (“Termination”),
rescind any exercise, payment or delivery pursuant to the Award (“Rescission”), or
recapture any Common Stock (whether restricted or unrestricted) or proceeds from
the Participant’s sale of Shares issued pursuant to the Award (“Recapture”), if the
Participant does not comply with the conditions of subsections (b), (c), and (e)
hereof (collectively, the “Conditions”).
(b) A
Participant shall not, without the Company’s prior written authorization,
disclose to anyone outside the Company, or use in other than the Company’s
business, any proprietary or confidential information or material, as those or
other similar terms are used in any applicable patent, confidentiality,
inventions, secrecy, or other agreement between the Participant and the Company
with regard to any such proprietary or confidential information or
material.
(c) Pursuant
to any agreement between the Participant and the Company with regard to
intellectual property (including, but not limited to, patents, trademarks,
copyrights, trade secrets, inventions, developments, improvements, proprietary
information, confidential business and personnel information), a Participant
shall promptly disclose and assign to the Company or its designee all right,
title, and interest in such intellectual property, and shall take all reasonable
steps necessary to enable the Company to secure all right, title and interest in
such intellectual property in the United States and in any foreign
country.
(d) Upon
exercise, payment or delivery of cash or Common Stock pursuant to an Award, the
Participant shall certify on a form acceptable to the Company that he or she is
in compliance with the terms and conditions of the Plan and, if a severance of
Continuous Service has occurred for any reason, shall state the name and address
of the Participant’s then-current employer or any entity for which the
Participant performs business services and the Participant’s title, and shall
identify any organization or business in which the Participant owns a
greater-than-five-percent equity interest.
(e) If the
Company determines, in its sole and absolute discretion, that (i) a Participant
has violated any of the Conditions or (ii) during his or her Continuous Service,
or within year after its termination for any reason, a Participant (x) has
rendered services to or otherwise directly or indirectly engaged in or assisted,
any organization or business that, in the judgment of the Company
in its
sole and absolute discretion, is or is working to become competitive with the
Company; (y) has solicited any employee of the Company to terminate employment
with the Company; or (z) has engaged in activities which are materially
prejudicial to or in conflict with the interests of the Company, including any
breaches of fiduciary duty or the duty of loyalty, then the Company may, in its
sole and absolute discretion, impose a Termination, Rescission, and/or Recapture
with respect to any or all of the Participant’s relevant Awards, Shares, and the
proceeds thereof.
(f) Within
days after receiving notice from the Company of any such activity described in
Section 15(e) above, the Participant shall deliver to the Company the Shares
acquired pursuant to the Award, or, if Participant has sold the Shares, the gain
realized, or payment received as a result of the rescinded exercise, payment, or
delivery; provided, that if the Participant returns Shares that the Participant
purchased pursuant to the exercise of an Option (or the gains realized from the
sale of such Common Stock), the Company shall promptly refund the exercise
price, without earnings, that the Participant paid for the
Shares. Any payment by the Participant to the Company pursuant to
this Section shall be made either in cash or by returning to the Company the
number of Shares that the Participant received in connection with the rescinded
exercise, payment, or delivery. It shall not be a basis for
Termination, Rescission or Recapture if after termination of a Participant’s
Continuous Service, the Participant purchases, as an investment or otherwise,
stock or other securities of such an organization or business, so long as (i)
such stock or other securities are listed upon a recognized securities exchange
or traded over-the-counter, and (ii) such investment does not represent more
than a five percent (5%) equity interest in the organization or
business.
(g) Notwithstanding
the foregoing provisions of this Section, the Company has sole and absolute
discretion not to require Termination, Rescission and/or Recapture, and its
determination not to require Termination, Rescission and/or Recapture with
respect to any particular act by a particular Participant or Award shall not in
any way reduce or eliminate the Company’s authority to require Termination,
Rescission and/or Recapture with respect to any other act or Participant or
Award. Nothing in this Section shall be construed to impose
obligations on the Participant to refrain from engaging in lawful competition
with the Company after the termination of employment that does not violate
subsections (b), (c), or (e) of this Section, other than any obligations that
are part of any separate agreement between the Company and the Participant or
that arise under Applicable Law.
(h) The
Committee may delegate administrative and discretionary authority to administer
the Plan to another committee of the Board, an officer of the Company or such
other person or as the Committee may designate from time to time.
(i) If any
provision within this Section is determined to be unenforceable or invalid under
any Applicable Law, such provision will be applied to the maximum extent
permitted by Applicable Law, and shall automatically be deemed amended in a
manner consistent with its objectives and any limitations required under
Applicable Law. Notwithstanding the foregoing, but subject to any
contrary terms set forth in any Award Agreement, this Section shall not be
applicable to any Participant from and after his or her termination of
Continuous Service after a Change in Control.
16. Recoupment
of Awards. Unless otherwise
specifically provided in an Award Agreement, and to the extent permitted by
Applicable Law, the Committee may in its sole and absolute discretion, without
obtaining the approval or consent of the Company’s stockholders, require that
any Participant reimburse the Company for all or any portion of any Awards
granted under this Plan (“Reimbursement”), or
the Committee may require the Termination or Rescission of, or the Recapture
associated with, any Award, if—
(a) the
granting, vesting, or payment of such Award was predicated upon the achievement
of certain financial results that were subsequently the subject of a material
financial restatement;
(b) in the
Committee’s view the Participant engaged in fraud or misconduct that caused or
partially caused the need for a material financial restatement by the Company or
any Affiliate; and
(c) a lower
granting, vesting, or payment of such Award would have occurred based upon the
restated financial results.
In each
instance, the Committee will, to the extent practicable and allowable under
Applicable Laws, require Reimbursement, Termination or Rescission of, or
Recapture relating to, any such Award granted to a Participant; provided that
the Company will not seek Reimbursement, Termination or Rescission of, or
Recapture relating to, any such Awards that were paid or vested more than three
years prior to the first date of the applicable restatement period.
17. Administration
of the Plan. The
Committee shall administer the Plan in accordance with its terms, provided that
the Board may act in lieu of the Committee on any matter. The
Committee shall hold meetings at such times and places as it may determine and
shall make such rules and regulations for the conduct of its business as it
deems advisable. In the absence of a duly appointed Committee, the
Board shall function as the Committee for all purposes of the Plan.
(a) Committee
Composition. The Board shall appoint the members of the
Committee. If and to the extent permitted by Applicable Law, the Committee may
authorize one or more executive officers to make Awards to Eligible Persons
other than themselves. The Board may at any time appoint additional
members to the Committee, remove and replace members of the Committee with or
without Cause, and fill vacancies on the Committee however caused.
(b) Powers of the
Committee. Subject to the provisions of the Plan, the
Committee shall have the authority, in its sole discretion:
(i) to grant
Awards and to determine Eligible Persons to whom Awards shall be granted from
time to time, and the number of Shares, units, or dollars to be covered by each
Award;
(ii) to
determine, from time to time, the Fair Market Value of Shares;
(iii) to
determine, and to set forth in Award Agreements, the terms and conditions of all
Awards, including any applicable exercise or purchase price, the installments
and conditions under which an Award shall become vested (which may be based on
performance), terminated, expired, cancelled, or replaced, and the circumstances
for vesting acceleration or waiver of forfeiture restrictions, and other
restrictions and limitations;
(iv) to
approve the forms of Award Agreements and all other documents, notices and
certificates in connection therewith which need not be identical either as to
type of Award or among Participants;
(v) to
construe and interpret the terms of the Plan and any Award Agreement, to
determine the meaning of their terms, and to prescribe, amend, and rescind rules
and procedures relating to the Plan and its administration;
(vi) in order
to fulfill the purposes of the Plan and without amending the Plan, to modify, to
cancel, or to waive the Company’s rights with respect to any Awards, to adjust
or to modify Award Agreements for changes in Applicable Law, and to recognize
differences in foreign law, tax policies, or customs; and
(vii) to make
all interpretations and to take all other actions that the Committee may
consider necessary or advisable to administer the Plan or to effectuate its
purposes.
Subject
to Applicable Law and the restrictions set forth in the Plan, the Committee may
delegate administrative functions to individuals who are Directors or
Employees.
(c) Deference to Committee
Determinations. The Committee shall have the discretion to
interpret or construe ambiguous, unclear, or implied (but omitted) terms in any
fashion it deems to be appropriate in its sole discretion, and to make any
findings of fact needed in the administration of the Plan or Award
Agreements. The Committee’s prior exercise of its discretionary
authority shall not obligate it to exercise its authority in a like fashion
thereafter. The Committee’s interpretation and construction of any
provision of the Plan, or of any Award or Award Agreement shall be final,
binding, and conclusive. The validity of any such
interpretation, construction, decision or finding of fact shall not be given de
novo review if challenged in court, by arbitration, or in any other forum, and
shall be upheld unless clearly made in bad faith or materially affected by
fraud.
(d) No Liability;
Indemnification. Neither the Board nor any Committee member,
nor any person acting at the direction of the Board or the Committee, shall be
liable for any act, omission, interpretation, construction or determination made
in good faith with respect to the Plan, any Award or any Award
Agreement. The Company and its Affiliates shall pay or reimburse any
member of the Committee, as well as any Director, Employee, or Consultant who in
good faith takes action on behalf of the Plan, for all expenses incurred with
respect to the Plan, and to the full extent allowable under Applicable Law shall
indemnify each and every one of them for any claims, liabilities, and costs
(including reasonable attorney’s fees) arising out of their good faith
performance of duties on behalf of the Plan. The Company and its
Affiliates may, but shall not be required to, obtain liability insurance for
this purpose.
18. Governing
Law. The terms of this
Plan shall be governed by the laws of the State of Delaware without regard to
its conflict of laws rules.
19.
|
Plan Termination or
Amendment
|
If not
sooner terminated by the Board, this Plan shall terminate at the close of
business on the date ten years after its effective date. No Awards
shall be made under the Plan after its termination. The Board may
amend or terminate the Plan as it shall deem advisable; provided that no change
shall be made that increases the total number of Shares of Company Stock
reserved for issuance pursuant to Awards granted under the Plan (except pursuant
to Section 13 above) unless such change is authorized by the stockholders of the
Company. A termination or amendment of the Plan shall not, without
the consent of the Participant, adversely affect a Participant’s rights under an
Award previously granted to him or her. Notwithstanding the
foregoing, the Committee may amend the Plan to comply with changes in tax or
securities laws or regulations, or in the interpretation thereof.
GENERAL
FINANCE CORPORATION
2009
STOCK INCENTIVE PLAN
_______________________________________
Appendix
I: Definitions
_______________________________________
As used
in the Plan, the following terms have the meanings indicated when they begin
with initial capital letters within the Plan:
“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such
Person. For the purposes of this definition, “control,” when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person or the power to elect directors, whether through the ownership of voting
securities, by contract or otherwise; and the terms “affiliated,” “controlling”
and “controlled” have meanings correlative to the foregoing.
“Applicable
Law” means the legal requirements relating to the administration of
options and share-based plans under any applicable laws of the United States,
any other country, and any provincial, state, or local subdivision, any
applicable stock exchange or automated quotation system rules or regulations, as
such laws, rules, regulations and requirements shall be in place from time to
time.
“Award”
means any award made pursuant to the Plan, including awards made in the form of
an Option, an SAR, a Restricted Share, a RSU, an Unrestricted Share, a DSU, or a
Performance Award, or any combination thereof, whether alternative or
cumulative.
“Award
Agreement” means any written document setting forth the terms of an Award
that has been authorized by the Committee. The Committee shall determine the
form or forms of documents to be used, and may change them from time to time for
any reason.
“Beneficiary”
means the person or entity designated by the Participant, in a form approved by
the Company, to exercise the Participant’s rights with respect to an Award or
receive payment or settlement under an Award after the Participant’s
death.
“Board”
means the Board of Directors of the Company.
“Cause” will have the meaning set
forth in any unexpired employment agreement between the Company and the
Participant. In the absence of such an agreement, “Cause” will exist if the
Participant is terminated from employment or other service with the Company or
an Affiliate for any of the following reasons: (i) the Participant’s willful
failure to substantially perform his or her duties and responsibilities to the
Company or deliberate violation of a material Company policy; (ii) the
Participant’s commission of any material act or acts of fraud, embezzlement,
dishonesty, or other willful misconduct; (iii) the Participant’s material
unauthorized use or disclosure of any
proprietary
information or trade secrets of the Company or any other party to whom the
Participant owes an obligation of nondisclosure as a result of his or her
relationship with the Company or (iv) Participant’s willful and material breach
of any of his or her obligations under any written agreement or covenant with
the Company. The Committee shall in its discretion determine whether
or not a Participant is being terminated for Cause. The Committee’s
determination shall, unless arbitrary and capricious, be final and binding on
the Participant, the Company, and all other affected persons. The
foregoing definition does not in any way limit the Company’s ability to
terminate a Participant’s employment or consulting relationship at any time, and
the term “Company” will be interpreted herein to include any Affiliate or
successor thereto, if appropriate.
“Change in
Control” means any of the following:
(i) Acquisition of Controlling
Interest. Any Person (other than
Persons who are a stockholder as of the date this Plan became effective)
becomes the Beneficial Owner (within the meaning of Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding securities. In applying the preceding sentence, (i)
securities acquired directly from the Company or its Affiliates by or for the
Person shall not be taken into account and (ii) an agreement to vote securities
shall be disregarded unless its ultimate purpose is to cause what would
otherwise be Change in Control, as reasonably determined by the
Board.
(ii) Change in Board
Control. During any consecutive one-year period commencing
after the date of adoption of this Plan, individuals who constituted the Board
at the beginning of the period (or their approved replacements, as defined in
the next sentence) cease for any reason to constitute a majority of the
Board. A new Director shall be considered an “approved replacement”
Director if his or her election (or nomination for election) was approved by a
vote of at least a majority of the Directors then still in office who either
were Directors at the beginning of the period or were themselves approved
replacement Directors, but in either case excluding any Director whose initial
assumption of office occurred as a result of an actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the
Board.
(iii) Merger. The
Company consummates a merger, or consolidation of the Company with any other
corporation unless: (a) the voting securities of the Company outstanding
immediately before the merger or consolidation would continue to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; and (b) no
Person (other than Persons who are Employees at any time more than one year
before a transaction) becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 50% or more of the combined
voting power of the Company’s then outstanding securities.
(iv) Sale of
Assets. The stockholders of the Company approve an agreement
for the sale or disposition by the Company of all, or substantially all, of the
Company’s assets.
(v) Liquidation or
Dissolution. The stockholders of the Company approve a plan or
proposal for liquidation or dissolution of the Company.
Notwithstanding
the foregoing, a “Change in Control” shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.
“Committee”
means the Compensation Committee of the Board or its successor.
“Company”
means General Finance Corporation, a Delaware corporation; provided, however,
that in the event the Company reincorporates to another jurisdiction, all
references to the term “Company” shall refer to the Company in such new
jurisdiction.
“Company
Stock” means common stock, $0.0001 par value, of the
Company. In the event of a change in the capital structure of the
Company affecting the common stock (as provided in Section 13), the Shares
resulting from such a change in the common stock shall be deemed to be Company
Stock within the meaning of the Plan.
“Consultant”
means any person, including an advisor, who is engaged by the Company or any
Affiliate to render services and is compensated for such services.
“Continuous
Service” means the absence of any interruption or termination of service
as an Employee, Director, or Consultant. Continuous Service shall not
be considered interrupted in the case of: (i) sick leave; (ii)
military leave; (iii) any other leave of absence approved by the Committee,
provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; (iv) changes in status from Director to advisory director or
emeritus status; or (iv) in the case of transfers between locations of the
Company or between the Company and its Affiliates. Changes in status
between service as an Employee, Director, and a Consultant will not constitute
an interruption of Continuous Service if the Committee determines that the
individual has continued or will continue to perform bona fide services for the
Company or determines that the relationship will or may result in adverse
accounting consequences. The Committee shall have the discretion to
determine whether and to what extent the vesting of any Awards shall be tolled
during any paid or unpaid leave of absence; provided, however, that in the
absence of such determination, vesting for all Awards shall be tolled during any
such unpaid leave (but not for a paid leave).
“Deferred
Share Units” or “DSUs”
mean Awards pursuant to Section 8 of the Plan.
“Director”
means a member of the Board, or a member of the board of directors of an
Affiliate.
“Disabled” means a condition under
which a Participant --
(a) 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 can be expected to last for a continuous period of not less than 12
months, or
(b) is,
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, received income replacement benefits for a
period of not less than 3 months under an accident or health plan covering
employees of the Company.
“Eligible
Person” means any Consultant, Director, or Employee.
“Employee”
means any person whom the Company or any Affiliate classifies as an employee
(including an officer) for employment tax purposes, whether or not that
classification is correct. The payment by the Company of a director’s
fee to a Director shall not be sufficient to constitute “employment” of such
Director by the Company.
“Employer”
means the Company and each Subsidiary and Affiliate that employs one or more
Participants.
“Fair
Market Value” means the fair market value of the Company Stock as of such
date based on the then prevailing prices of the Company Stock on a Principal
Exchange.
“Grant
Date” means the later of (i) the date designated as the “Grant Date”
within an Award Agreement, and (ii) date on which the Committee determines the
key terms of an Award, provided that as soon as reasonably practical thereafter
the Committee both notifies the Eligible Person of the Award and enters into an
Award Agreement with the Eligible Person.
“Involuntary
Termination”
means termination of a Participant’s Continuous Service under the
following circumstances occurring on or after a Change in
Control: (i) termination without Cause by the Company or an Affiliate
or successor thereto, as appropriate; or (ii) voluntary termination by the
Participant within one year following (A) a material reduction in the
Participant’s job responsibilities, provided that neither a mere change in title
alone nor reassignment to a substantially similar position shall constitute a
material reduction in job responsibilities; (B) an involuntary relocation of the
Participant’s work site to a facility or location more than 60 miles from the
Participant’s principal work site at the time of the Change in Control; or (C) a
material reduction in Participant’s total compensation other than as
part of an reduction by the same percentage amount in the compensation of all
other similarly-situated Employees or Directors.
“Option”
means a right to purchase Company Stock granted under the Plan, at a price
determined in accordance with the Plan.
“Participant”
means any Eligible Person who receives an Award.
“Performance
Awards” mean Awards granted pursuant to Section 9.
“Performance
Unit” means an Award granted pursuant to Section 9(a) of the Plan which
may be paid in cash, in Shares, or such combination of cash and Shares as the
Committee in its sole discretion shall determine.
“Person”
means any natural person, association, trust, business trust, cooperative,
corporation, general partnership, joint venture, joint-stock company, limited
partnership, limited liability company, real estate investment trust, regulatory
body, governmental agency or instrumentality, unincorporated organization or
organizational entity.
“Plan”
means this Company 2009 Stock Incentive Plan.
“Principal
Exchange” means the New York Stock Exchange, the American Stock Exchange,
NASDAQ or such other stock exchange as the Company Stock is then listed for
trading.
“Recapture”
has the meaning set forth in Section 15 of the Plan.
“Rescission”
has the meaning set forth in Section 15 of the Plan.
“Reimbursement”
has the meaning set forth in Section 16 of the Plan.
“Restricted
Share” means Company Stock awarded under Section 7.
“Restricted
Share Unit” or “RSU”
means a right granted to a Participant to receive Company Stock or cash awarded
under Section 7.
“Retirement”
means a Participant’s termination of employment after age 65.
“Share”
means a share of common stock of the Company, as adjusted in accordance with
Section 13 of the Plan.
“SAR”
or “Share
Appreciation Right” means a right to receive amounts awarded under
Section 6.
“Unrestricted
Shares” mean Shares awarded pursuant to Section 7 of the
Plan.
“Withholding
Taxes” means the aggregate minimum amount of federal, state, local and
foreign income, payroll and other taxes that the Company and any Affiliates are
required to withhold in connection with any Award.
GENERAL
FINANCE CORPORATION
2009
STOCK INCENTIVE PLAN
_______________________________________
Appendix
II: U.S. Sub-Plan
_______________________________________
This
Appendix II applies to any Awards that are made to Eligible Persons who are
residents of the United States of America (“U.S.”)
and who are or may become subject to U.S. tax (i.e. income tax and/or social
security tax) as a result of Awards granted under the Company 2009 Stock
Incentive Plan (the “Plan”). Terms
herein that begin with initial capital letters have the special definition set
forth in the Plan.
This
Appendix II shall be read in conjunction with the Plan and is subject to the
terms and conditions of the Plan; provided that, to the extent that the terms
and conditions of the Plan differ from or conflict with the terms of this
Appendix II, the following terms of this Appendix II shall prevail:
A. Additional
or Modified Definitions. Appendix I of the
Plan shall be modified as follows:
“Code”
means the Internal Revenue Code of 1986, as amended.
“Committee”
shall be modified to mean (i) with respect to any decision involving an Award
intended to satisfy the requirements of Section 162(m) of the Code, a committee
consisting of two or more Directors of the Company who are “outside directors”
within the meaning of Code Section 162(m), and (ii) with respect to any decision
relating to a Reporting Person, a committee consisting of solely of two or more
Directors who are disinterested within the meaning of Rule 16b-3.
“Exchange
Act” means the
Securities Exchange Act of 1934, as amended.
“Incentive
Stock Option” or “ISO”
means, an Option that qualifies for favorable income tax treatment under Code
Section 422.
“Non-ISO” means an Option not intended
to qualify as an Incentive Stock Option, as designated in the applicable Award
Agreement.
“Reporting
Person” means an
Employee, Director, or Consultant who is subject to the reporting requirements
set forth under Rule 16b-3
“Rule
16b-3” means Rule
16b-3 promulgated under the Exchange Act, as amended from time to time, or any
successor provision.
“Ten
Percent Holder” means a person who owns (within the meaning of Code
Section 422) stock representing more than ten percent (10%) of the combined
voting power of all classes of stock of the Company.
B. Eligibility. Section
4(a) of the Plan shall be modified by inserting the following sentence at the
end thereof:
Notwithstanding
the foregoing, a Person shall not be an Eligible Person with respect to Options
or SARs if they are classified as an Employee solely by an entity that is a
“parent corporation” (within the meaning of Code Section 424) of the
Company.
C. Payment
of Exercise Price. In order to ensure compliance with the
Sarbanes-Oxley Act of 2002, Section 5(b) of the Plan shall be modified by inserting the
following sentence at the end thereof:
Notwithstanding
any other provision of the Plan to the contrary, no Participant who is a
Director or an “executive officer” of the Company within the meaning of Section
13(k) of the Exchange Act shall be permitted to make payment with respect to any
Awards granted under the Plan, or continue any extension of credit with respect
to such payment with a loan from the Company or a loan arranged by the Company
in violation of Section 13(k) of the Exchange Act.
D. Authorization
for ISOs. In order to
permit the granting of ISOs, the Section 5 of Plan shall be modified by adding
the following subsection (f) at the end thereof:
(f) Special ISO
Provisions. The following provisions shall control any grants
of Options that are denominated as ISOs.
(i) Grants of
ISOs. The Committee may grant ISOs only to Employees (including
officers who are Employees) of the Company or an Affiliate that is a “parent
corporation” or “subsidiary corporation” within the meaning of Section 424 of
the Code. Each Option that is intended to be an ISO must be
designated in the Award Agreement as an ISO, provided that any Option designated
as an ISO will be a Non-ISO to the extent the Option fails to meet the
requirements of Code Section 422. In the case of an ISO, the
Committee shall determine the acceptable methods of payment on the Date of Grant
and it shall be included in the applicable Award Agreement.
(ii) Maximum
Limit. The number of Shares that are available for ISO Awards
shall be determined, to the extent required under the Code, by reducing the
number of Shares designated in Section 3 of the Plan by the number of Shares
issued pursuant to Awards, provided that any Shares that are issued under
the Plan and forfeited back to the Plan shall be available for issuance
pursuant to future ISO Awards.
(iii) $100,000
Limit. To the extent that the aggregate Fair Market Value of
Shares with respect to which Options designated as ISOs first become exercisable
by a Participant in any calendar year (under this Plan and any other plan of the
Company or any Affiliate) exceeds U.S. $100,000, such excess Options shall be
treated as Non-ISOs. For purposes of determining whether the U.S.
$100,000 limit
is
exceeded, the Fair Market Value of the Shares subject to an ISO shall be
determined as of the Grant Date. In reducing the number of Options
treated as ISOs to meet the U.S. $100,000 limit, the most recently granted
Options shall be reduced first. In the event that Section 422 of the
Code is amended to alter the limitation set forth therein, the limitation of
this paragraph shall be automatically adjusted accordingly.
(iv) Grants to 10%
Holders. In the case of an Incentive Stock Option granted to
an Employee who is a Ten Percent Holder on the Date of Grant, the term of the
Incentive Stock Option shall not exceed five years from the Date of Grant, and
the exercise price shall be at least 110% of the Fair Market Value of the
underlying Shares on the Grant Date. In the event that Section 422 of
the Code is amended to alter the limitations set forth therein, the limitation
of this paragraph shall be automatically adjusted accordingly.
(v) Substitution of
Options. Notwithstanding any other provisions of the Plan, in
the event the Company or an Affiliate acquires (whether by purchase, merger or
otherwise) all or substantially all of outstanding capital stock or assets of
another corporation or in the event of any reorganization or other transaction
qualifying under Code Section 424, the Committee may, in accordance with the
provisions of that Section, substitute ISOs for ISOs under the plan of the
acquired company provided (i) the excess of the aggregate Fair Market Value of
the Shares subject to an ISO immediately after the substitution over the
aggregate exercise price of such shares is not more than the similar excess
immediately before such substitution, and (ii) the new ISO does not give
additional benefits to the Participant, including any extension of the exercise
period.
(vi) Notice of Disqualifying
Dispositions. By executing an ISO Award Agreement, each
Participant agrees to notify the Company in writing immediately after the
Participant sells, transfers or otherwise disposes of any Shares acquired
through exercise of the ISO, if such disposition occurs within the earlier of
(i) two years of the Grant Date, or (ii) one year after the exercise of the ISO
being exercised. Each Participant further agrees to provide any
information about a disposition of Shares as may be requested by the Company to
assist it in complying with any applicable tax laws.
E. SARs. Section
6 of the Plan shall be modified through addition of the following sentence at
the end of Section 6(d):
Any SAR
granted in tandem with an ISO will contain such terms as may be required to
comply with the provisions of Code Section 422.
F. Restricted
Shares or RSUs. Section 7 of the Plan shall be modified by
adding the following paragraph at its end:
(g) Section 83(b)
Elections. A Participant may make an election under Code
Section 83(b) (the “Section 83(b)
Election”) with respect to Restricted Shares. A
Participant
who has
received RSUs may, within ten days after receiving the RSU Award, provide the
Committee with a written notice of his or her desire to make Section 83(b)
Election with respect to the Shares subject to such RSUs. The
Committee may in its discretion convert the Participant’s RSUs into Restricted
Shares, on a one-for-one basis, in full satisfaction of the Participant’s RSU
Award. The Participant may then make a Section 83(b) Election with
respect to those Restricted Shares; provided that the Participant’s Section
83(b) Election will be invalid if not filed with the Company and the appropriate
U.S. tax authorities within 30 days after the Grant Date of the RSUs replaced by
the Restricted Shares.
G.
|
DSUs. Section
8 of the Plan shall be modified as
follows:
|
|
Section
8(a) shall be modified through addition of the following sentence at its
end:
|
For any
Participant who is subject to U.S. income taxation, the Committee shall only
authorize deferral elections pursuant to Section 8 (i) under written procedures,
and using written election forms that satisfy the requirements of Code Section
409A, and (ii) shall only be made by Eligible Persons who are Directors,
Consultants, or members of a select group of management or highly compensated
Employees (within the meaning of the Code).
Section
8(e) of the Plan shall be modified through addition of the following at its
end:
For all
DSUs granted to Participants who are U.S. taxpayers, the term “unforeseeable
emergency” shall be interpreted in accordance with Section 409A of the Code, and
the term “dependent” shall be interpreted in accordance with Section 152(a) of
the Code.
Section 8
of the Plan shall be modified through addition of the following at its
end:
(g) Termination of
Service. For purposes of Section 8 of the Plan, a
Participant’s “Continuous Service” shall only end when the Participant incurs a
“separation from service” within the meaning of Treasury Regulations
§1.409A-1(h). A Participant shall be considered to have experienced a
termination of Continuous Service when the facts and circumstances indicate that
either (i) no further services will be performed for the Company or any
Affiliate after a certain date, or (ii) that the level of bona fide services the
Participant will perform after such date (whether as an Employee, Director, or
Consultant) are reasonably expected to permanently decrease to no more than 50%
of the average level of bona fide services performed by such Participant
(whether as an Employee, Director, or Consultant) over the immediately preceding
36-month period (or full period of services to the Company and its Affiliates if
the Participant has been providing such services for less than 36
months).
H. Performance
Awards. Section 9 of the Plan shall be modified by adding the following
paragraphs and by re-lettering Section 9(b) as Section 9(e):
(b) Performance Compensation
Awards. Subject to the limitations set forth in Section 9 and
in this Appendix II.H., the Committee may, at the time of grant of a Performance
Unit, designate such Award as a “Performance Compensation
Award” (payable in cash or Shares) in order that such Award constitutes
“qualified performance-based compensation”
under
Code Section 162(m), in which event the Committee shall have the power to grant
such Performance Compensation Award upon terms and conditions that qualify it as
“qualified performance-based compensation” within the meaning of U.S. Code
Section 162(m). With respect to each such Performance Compensation
Award, the Committee shall establish, in writing within the time required under
Code Section 162(m), a “Performance Period,”
“Performance
Measure(s)”, and “Performance
Formula(e)” (each such term being defined below). A
Participant shall be eligible to receive payment in respect of a Performance
Compensation Award only to the extent that the Performance Measure(s) for such
Award is achieved and the Performance Formula(e) as applied against such
Performance Measure(s) determines that all or some portion of such Participant’s
Award has been earned for the Performance Period. As soon as
practicable after the close of each Performance Period, the Committee shall
review and certify in writing whether, and to what extent, the Performance
Measure(s) for the Performance Period have been achieved and, if so, determine
and certify in writing the amount of the Performance Compensation Award to be
paid to the Participant and, in so doing, may use negative discretion to
decrease, but not increase, the amount of the Award otherwise payable to the
Participant based upon such performance
(c) Limitations on
Awards. The maximum Performance Award and the maximum
Performance Compensation Award that any one Participant may receive for any one
Performance Period shall not together exceed 250,000 Shares, as adjusted
pursuant to Section 13 below (or, for Performance Units to be settled in cash,
U.S. $250,000.
(d) Definitions.
(i) “Performance
Formula” means, for a Performance Period, one or more objective formulas or
standards established by the Committee for purposes of determining whether or
the extent to which an Award has been earned based on the level of performance
attained or to be attained with respect to one or more Performance
Measure(s). Performance Formulae may vary from Performance Period to
Performance Period and from Participant to Participant and may be established on
a stand-alone basis, in tandem or in the alternative.
(ii) “Performance
Measure” means one or more of the following selected by the Committee to measure
Company, Affiliate, and/or business unit performance for a Performance Period,
whether in absolute or relative terms (including, without limitation, terms
relative to a peer group or index): basic, diluted, or adjusted
earnings per share; sales or revenue; earnings before interest, taxes, and other
adjustments (in total or on a per share basis); basic or adjusted net income;
returns on equity, assets, capital, revenue or similar measure; economic value
added; working capital; total stockholder return; and product development,
product market share, research, licensing, litigation, human resources,
information services, mergers, acquisitions, sales of assets of Affiliates or
business units. Each such measure shall be, to the extent applicable,
determined in accordance with generally accepted
accounting
principles as consistently applied by the Company (or such other standard
applied by the Committee) and, if so determined by the Committee, and in the
case of a Performance Compensation Award, to the extent permitted under Code
Section 162(m), adjusted to omit the effects of extraordinary items, gain or
loss on the disposal of a business segment, unusual or infrequently occurring
events and transactions and cumulative effects of changes in accounting
principles. Performance Measures may vary from Performance Period to
Performance Period and from Participant to Participant, and may be established
on a stand-alone basis, in tandem or in the alternative.
(iii) “Performance
Period” means one or more periods of time (of not less than one fiscal year of
the Company), as the Committee may designate, over which the attainment of one
or more Performance Measure(s) will be measured for the purpose of determining a
Participant’s rights in respect of an Award.
I. Taxes;
Withholding. In order to confirm with Code Section 409A,
Section 10 of the Plan shall be modified by inserting the following at the end
thereof:
Notwithstanding
anything to the contrary contained in the Plan, this Sub-Plan or any Award, the
Committee shall have the sole discretion to (i) organize any deferral program,
to require deferral election forms, and to grant or to unilaterally modify any
Award in a manner that complies with the requirements of Code Section 409A, or
(ii) interpret the requirements of the Code, including Code Section 409A, for
purposes of the Plan, the Sub-Plan, and all Awards.
PROXY
GENERAL
FINANCE CORPORATION
ANNUAL
MEETING OF STOCKHOLDERS
December 10,
2009
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
GENERAL
FINANCE CORPORATION
The
undersigned hereby appoints Charles E. Barrantes and Christopher A. Wilson, and
each of them, the proxy or proxies of the undersigned with full powers of
substitution each to attend and to vote at the Annual Meeting of Stockholders of
General Finance Corporation to be held on December 10, 2009 at the office
of General Finance Corporation located at 39 East Union Street, Pasadena,
California, beginning at 10:00 a.m. local time, and any adjournments
thereof, and to vote all shares of Common Stock that the undersigned would be
entitled to vote if personally present, in the manner indicated below and on the
reverse side, and on any other matters properly brought before the Annual
Meeting or any adjournments thereof, all as set forth in the Proxy Statement
dated October 19, 2009.
(Please
mark your choice like this /x/ in black or blue ink.)
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
“FOR”
ALL NOMINEES,
"FOR"
THE APPROVAL OF THE 2009 STOCK INCENTIVE PLAN
AND
“FOR”
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
(1)
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Election
of the following nominees as Class C
directors:
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Ronald L.
Havner, Jr.
Ronald F.
Valenta
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(Authority
to vote for any nominee may be withheld by lining through or otherwise
striking out the name of such
nominee.)
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(2)
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Approval
of the General Finance Corporation 2009 Stock Incentive
Plan:
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(3)
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Ratification
of the selection of Crowe Horwath LLP as our independent
auditors:
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(This
proxy is continued on the reverse side. Please date, sign and return
promptly.)
THE
UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING, PROXY
STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS (INCLUDING FORM 10-K) OF GENERAL
FINANCE CORPORATION
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(Signature
should be exactly as name or names appear on this proxy. If stock is held
jointly, each holder should sign. If signature is by attorney, executor,
administrator, trustee or guardian, please give full
title.)
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Date:
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,
2009
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Signature
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Signature
if held jointly
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I
plan to attend the Annual Meeting: Yes o
No o
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This
proxy will be voted FOR all of the nominees, FOR the 2009 Stock Incentive
Plan and FOR the ratification of the selection of independent
auditors, unless otherwise indicated, and in the discretion of the proxies
on all other matters properly brought before the Annual
Meeting.
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