EXHIBIT 10.5
Employee:____________________
Grant Date:__________________
No. Shares:__________________
FMV Per Share on Date
of Grant:__________________
Exercise Price
Per Share:_________________
INCENTIVE STOCK OPTION AGREEMENT PURSUANT
TO THE HOSPITALITY MARKETING CONCEPTS INC. 1998 STOCK OPTION PLAN
I. IDENTIFICATION. This Incentive Stock Option Agreement (the
"Agreement") is made by and between Hospitality Marketing Concepts Inc., a
Delaware corporation (the "Company"), and ___________________________ (the
"Employee") as of ____________, 199_.
2. RECITALS.
2.1 On __________, ___, 1998, the Board of Directors of the
Company adopted the Hospitality Marketing Concepts Inc. 1998 Stock Option
Plan (the "Plan") providing for the grant of incentive stock options and
nonqualified stock options to key employees, directors, consultants and
service providers of the Company or any of its Subsidiaries (as defined in
the Plan).
2.2 The shareholders of the Company approved the Plan on
____________.
2.3 Employee is a key employee of the Company and/or one or more
of its Subsidiaries to whom options may be granted under the Plan.
2.4 The Stock Option and Compensation Committee (the "Committee")
of the Board of Directors of the Company has authorized the grant to Employee
of an option to purchase the Company's Common Stock upon the terms and
conditions hereinafter set forth.
3. GRANT OF OPTION. Pursuant to the action of the Committee, and
subject to the terms and conditions of this Agreement and the terms and
conditions of the Plan, the Company grants to Employee an option to purchase
________ (___) shares of the Company's authorized and unissued Common Stock
from the Company at the price of __________________ Dollars ($______) per
share (the "Option"). The Option will be an incentive stock option, and will
comply with all of the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
4. TERM OF OPTION. The Option was granted on ______________, 199_ (the
"Grant Date"). Unless previously exercised pursuant to Section 5, the Option
shall terminate on, and shall not be exercisable after, the expiration of
(_____) years after the Grant Date [not to exceed ten (10) years].
5. EXERCISE.
5.1 EXERCISABILITY. Subject to the terms and conditions of this
Agreement, the Option shall become exercisable in _______________ equal
cumulative installments of _________ shares of the Company's Common Stock
(individually an "Installment" and collectively the "Installments").
Employee may exercise the Option with respect to each Installment on or after
each successive annual anniversary of the Grant Date according to the
following schedule:
Installment Exercise Date
(number of -------------
shares becoming
exercisable)
----------------
First
Anniversary _________________ ________________
Second
Anniversary _________________ ________________
Third
Anniversary _________________ ________________
Fourth
Anniversary _________________ ________________
Fifth
Anniversary _________________ ________________
Sixth
Anniversary _________________ ________________
Seventh
Anniversary _________________ ________________
Eighth
Anniversary _________________ ________________
Ninth
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Anniversary _________________ ________________
5.2 NOTICE OF EXERCISE. Employee shall exercise the Option by (i)
notifying the Secretary of the Company of Employee's election to exercise the
Option and (ii) paying in full the purchase price as provided in Section 5.3.
5.3 PAYMENT OF PURCHASE PRICE. The purchase price for any shares
of Common Stock with respect to which Employee exercises the Option shall be
paid in full promptly after Employee gives notice of exercise as provided in
Section 5.2. The purchase price shall be paid: (a) in cash or by check in
United States dollars, or (b) if, and only if, the Committee so authorizes in
its sole discretion, at the time Employee gives notice of exercise, (i) by
transferring to the Company for redemption, Common Stock of the Company at
its "Fair Market Value" (as defined in the Plan), with share certificates
duly endorsed and accompanied by instruments of transfer with signatures
guaranteed, or (ii) by surrendering to the Company for cancellation one or
more Options granted to Employee under the Plan at their respective Option
Values (as defined in the Plan), or (c) if, and only if, the Committee so
authorizes in its sole discretion, a combination of (a), (b)(i) and/or
(b)(ii). If Employee desires to pay all or a portion of the purchase price
for the shares by transferring to the Company Common Stock for redemption, or
surrendering Options for cancellation, Employee shall so notify the Secretary
of the Company with the notice of Employee's election to exercise the Option
in accordance with Section 5.2. Promptly after receipt of Employee's notice
of exercise and request for payment by redemption or cancellation, the
Company shall notify Employee of its decision as to whether it will permit
Employee to pay the purchase price by transferring the Company's Common Stock
to it for redemption or transferring Options to it for cancellation. If the
Committee does not authorize the proposed payment by redemption or
cancellation, Employee shall pay the purchase price in cash or by check in
United States dollars as provided above. Employee acknowledges that, if
payment is made by transfer of Common Stock acquired by exercise of an Option
which was intended to be an incentive stock option, or by surrender of an
Option which is intended to be an incentive stock option, the favorable tax
treatment accorded to incentive Stock Options under the Code will not apply
to such transferred Common Stock or such surrendered Option.
6. ISSUANCE OF SHARES. Promptly after the Company's receipt of
notification of exercise provided for in Section 5.2 and Employee's payment in
full of the purchase price, the Company shall deliver, or cause to be delivered,
to Employee a certificate
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for the whole number of shares with respect to which the Option is being
exercised by Employee. Shares shall be registered in the name of Employee.
If any law or regulation of the Securities and Exchange Commission or of any
other federal or state governmental body having jurisdiction shall require
the Company or Employee to take any action prior to the issuance to Employee
of the shares of Common Stock of the Company specified in the written notice
of election to exercise, the date for the delivery of such shares shall be
adjourned until the completion of such action.
7. TERMINATION OF EMPLOYMENT; DEATH; PERMANENT DISABILITY. If
Employee's employment with the Company (including for this purpose any
Subsidiary) is terminated for any reason (other than permanent disability or
dismissal for Cause as defined in the Plan) while Employee is still living,
the Option or any unexercised Installments, to the extent the Option would
have been exercisable by Employee on the date on which he ceases to be an
employee (the "Termination Date"), may be exercised by Employee within ____
months [not to exceed three (3) months] from the Termination Date (the
"Post-Termination Period"), but in any event not later than the expiration
date of the Option. If Employee dies or becomes "permanently disabled" (a
physical or mental impairment as defined in Section 22(e)(3) of the Code)
while he is employed by the Company or during the Post-Termination Period (if
the Employee's termination was for any reason other than Cause), the Option
or any unexercised Installment, to the extent exercisable by him on the date
of death or permanent disability, may be exercised by Employee, or if
Employee is then deceased or legally incapacitated, by Employee's personal
representative, heirs, or legatees, at any time prior to the expiration of
____ months [not to exceed twelve (12) months] from the Termination Date, but
in any event, not later than the expiration date of the Option. In the
Committee's sole discretion, all or any unexercisable Options or Installments
may become exercisable on the date of Employee's death, so that such Options
or Installments may be exercised pursuant to this Section 7 even though they
would not otherwise have been exercisable had Employee not died.
Unexercisable Options or Installments [shall (__)] [shall not (__)] become
exercisable on the date of Employee's death. Notwithstanding the foregoing,
if Employee's employment with the Company is terminated for Cause as
determined by the Committee in its sole discretion, the Option shall expire
on the Termination Date and thereafter shall not be exercisable in whole or
in part.
8. ASSIGNMENT OR TRANSFER. The Option is not assignable or transferable
except by will or by the laws of descent and distribution and during Employee's
lifetime the Option may be exercised only by Employee. No transfer of the
Option by will or by the laws of descent and distribution shall be effective,
nor shall any designation of a person who may exercise the Option
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after Employee's death be effective to bind the Company unless the Company is
furnished with a written notice thereof and a copy of the will or such other
evidence as the Company deems necessary to establish the validity of the
transfer and the acceptance of the terms and conditions of the Option by the
transferee or designee.
9. NO RIGHTS AS SHAREHOLDER. Employee shall have no rights as a
shareholder with respect to shares of the Common Stock covered by this Option
until the date of the issuance of a stock certificate or stock certificates
evidencing issuance of such shares pursuant to Employee's exercise of the
Option. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 10 hereof.
10. MODIFICATION AND TERMINATION.
10.1 The rights of Employee under this Agreement are subject to
modification and termination as provided in the Plan.
10.2 If the number of issued and outstanding shares of Common
Stock changes as a result of a stock split, reverse stock split, stock
dividend, recapitalization, or any other change in the capital structure of
the Company, the Committee, subject to approval by the Board, may
appropriately adjust (a) the maximum number of shares which may be issued
under the Plan, (b) the number of shares subject to each outstanding option,
and (c) the price per share of each Option (but not the total price thereof),
so that upon exercise of the Option, Employee will receive the same number of
shares he would have received had he been the holder of all shares subject to
his outstanding Options immediately before the effective date of the change
in the number of issued shares of Common Stock. The adjustment shall not
result in the issuance of fractional shares.
10.3 If the Company liquidates, merges, reorganizes, or
consolidates with any other corporation in which the Company is not the
surviving corporation or the Company becomes a wholly-owned subsidiary of
another corporation, any unexercised option previously granted under the Plan
shall be deemed canceled unless the surviving corporation in any merger,
reorganization or consolidation elects to assume the options under the Plan
or to issue substitute options in place thereof. If options are to be
canceled in accordance with the foregoing, Employee shall have the right,
exercisable during a thirty (30)-day period, ending on the fifth day prior to
the liquidation, merger, reorganization or consolidation, to exercise
Employee's Options, in whole or in
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part, without regard to any installment exercise provisions in this Agreement.
10.4 No incentive stock option granted pursuant to the Plan shall
be adjusted in any manner that causes it to fail to continue to qualify as an
"incentive stock option" within the meaning of the Section 422 of the Code.
10.5 The grant of the Option pursuant to the Plan shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes in its capital structure; to
merger, consolidate, or dissolve; to change its business structure; or to
liquidate, sell or transfer all or any part of its business or assets.
11. NO RIGHT TO EMPLOYMENT. Nothing in this Agreement, the Plan, or
any instrument executed pursuant to the Plan shall confer upon Employee the
right to continue to be employed by the Company or any Subsidiary, affect the
right of the Company or any Subsidiary to terminate the employment of
Employee with or without Cause, or be evidence of any agreement or
understanding, express or implied, that the Company or any Subsidiary will
employ or continue to employ Employee in a particular position or at a
particular rate of remuneration.
12. COMPLIANCE WITH SECURITIES LAWS. At the time the Option is
exercised, the Company may require Employee to execute any documents or take
any action which may be then necessary to comply with the Securities Act of
1933, as amended, and the rules and regulations adopted thereunder, or any
other applicable federal or state laws for the purpose of regulating the sale
and issuance of securities. The Company reserves the right to change its
requirements with respect to enforcing compliance with federal and state
securities laws, including the request for, and enforcement of, letters of
investment intent, such requirements to be determined by the Company in its
judgment as necessary to assure compliance with such laws. Such changes may
be made, with respect to this Option, upon exercise hereof, or prior to or
after the exercise of this Option. The Company shall not be obligated to
issue any shares upon the exercise of this Option unless the issuance, in the
judgment of the Board, is in full compliance with all applicable laws,
governmental rules and regulations, undertakings of the Company made under
the Securities Act of 1933, as amended, any state securities laws, and stock
exchange agreements of the Company.
13. GENERAL PROVISIONS.
13.1 SUBJECT TO PLAN. This Agreement shall conform with, and be
subject to, all of the terms and conditions of the
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Plan. Any conflict or inconsistency between this Agreement and the Plan
shall be resolved in conformity with, and shall be governed by, the Plan.
The Plan is attached hereto as Exhibit "A" and incorporated herein by this
reference.
13.2 FURTHER ACTS. Employee agrees to perform all further acts
and to execute and deliver any other and additional documents as may be
reasonably necessary to carry out the provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement is executed by the parties on the
date and at the place indicated below.
"COMPANY"
HOSPITALITY MARKETING CONCEPTS INC.,
a Delaware corporation
Executed on _________, 199_
at __________, ____________. By:___________________________
Its________________________
"EMPLOYEE"
Executed on _________, 199_
at __________, ____________. ______________________________
Employee's Name
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